Musk Launches TeraFab Plan to Build Massive AI Chip Foundry
Demand for computing power at Tesla, SpaceX and xAI is rising rapidly as they develop autonomous driving, humanoid robots and Grok, making supplies of AI chips and memory a constraint on expansion. Musk is therefore advancing TeraFab to gain control over custom silicon, 2-nanometer manufacturing and advanced packaging while reducing reliance on external foundries.
Musk said TeraFab would launch within seven days. SpaceX plans to invest more than NT$1.7 trillion in a Texas facility and earmark $3 billion to use Intel’s 14A process to supply SpaceX. Intel has announced that it is joining the project, while the team is also targeting talent in Taiwan with expertise in 2-nanometer technology and advanced packaging. Musk stressed that TeraFab would be a TSMC customer, not a competitor.
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The history behind this eventTesla, SpaceX Commit $16.8 Billion to Texas AI Chip Fab
Tesla and SpaceX plan to build an advanced semiconductor plant in Texas to reduce reliance on outside chip suppliers and address a widening shortage of computing capacity for artificial intelligence. The facility, called Terafab, is intended to produce high-performance chips for Tesla’s Optimus humanoid robots and robotaxis, as well as SpaceX’s proposed data centers in space, extending Elon Musk’s industrial ambitions into large-scale chip manufacturing.
As of Aug. 9, 2026, the companies have outlined an initial investment of $16.8 billion and said construction is approaching the groundbreaking stage. Tesla has also begun recruiting workers with DRAM expertise, signaling that Terafab may encompass memory technology alongside AI processors. The companies have not disclosed a production start date, manufacturing process node or full capacity target, leaving key details of the project’s scale and timetable unresolved.
Ming-Chi Kuo Sees MediaTek as Key Partner in Musk’s Terafab Plan, Chasing Major AI Chip Orders
Elon Musk is planning Terafab as a large-scale semiconductor manufacturing operation to support the computing needs of his AI businesses. TF International Securities analyst Ming-Chi Kuo said MediaTek’s experience working with Intel and Google TPU could make it a core strategic partner and expand its presence in the custom AI chip market.
Kuo recently identified MediaTek as a key piece of the Terafab plan. If it secures the orders, the chipmaker could enter the supply chains of three major AI ecosystems: Google, NVIDIA and Musk. However, current reports have not disclosed a contract signing date, order value, mass-production schedule or Terafab’s formal investment size.
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