Two of Elon Musk’s companies, Tesla and SpaceX, are planning to build a chipmaking factory in Texas, reportedly in line with Musk’s vision of powering robotics, autonomous technologies, and space exploration.
The estimated cost of the project is $20 billion and has multiple ambitious production goals, including the annual production of 100 million to 200 million AI and memory chips.
Officially called TERAFAB, the facility, if built, is expected to generate tremendous amounts of computing power for Elon’s companies that currently, like the rest of the industry, rely on large-scale chip manufacturers such as TSMC. Speaking on stage in Austin, Texas, Musk justified the factory saying that the current rate of production of existing chipmakers is “much less than we would like.”
Elon’s multiple startups—Tesla, xAI, and SpaceX, particularly—purchase chips in bulk from TSMC, Samsung, and NVIDIA. Tesla already operates a factory in Texas called Giga Texas. At the time of writing, Tesla shares were trading at $376.64, up by 2.36%.
Production in the factory is expected to power Tesla’s autonomous driving software, Robotaxis, and humanoid robots. A huge portion of these chips will be used for AI-powered satellites, an innovation Elon Musk has talked of previously at the Davos summit.
AI-powered orbital satellites will take up 80% of chip production, with Musk rationalizing that compute would be much cheaper to produce in space than on Earth—something that could be more important as energy costs for AI applications could greatly increase over the coming years.