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Elon Musk has announced the launch of a massive semiconductor project in Austin, Texas, dubbed "Terafab," aimed at internalizing chip production for his expanding ecosystem of AI, robotics, and aerospace ventures.
The facility, which will be jointly operated by Tesla Inc (NASDAQ:TSLA) and SpaceX, is designed to bypass what Musk characterized as a sluggish global semiconductor industry unable to meet his aggressive scaling requirements.
The project targets the eventual support of a terawatt of computing power annually, facilitating the transition toward autonomous driving, humanoid robotics, and space-based data centers.
Around 33 minutes starts the compute needed and the Terafab chip buildout:
"Assume that Columbus the navigator monopolized ships, monopolized new energy (oil vs. coal), and monopolized collaboration opportunities among navigators. How should the New World be valued?"
Here is the disconnect: Elon said that the foundries were not comfortable with committing to the output that he requires. Current chip output is at 2% what they need so it is significant. Elon said he would buy all of the chips they can make etc...
To me this does not pass the sniff test. If Elon was able to write a big enough check, which I assume he can, TSMC would build the fabs. They do this for Apple and Nvidia, they can do this for Tesla/SpaceX.
The key here, and in other Elon Musk ventures, is that Elon thinks he can do it better than TSMC. I certainly hope this is true. This will push TSMC and the other foundries to work harder and that is a good thing.
I'm a big fan of disruption. I met Steve Jobs when he founded NEXT. Steve was a disrupter. Elon Musk even more so. We should, however, remember that disrupters make mistakes too. There are a lot of pivots in semiconductor disruptions. The laws of physics still apply with semiconductor disruptions. The chances of Elon Musk being successful here within a fixed amount of time is infinitesimal. Elon/Tesla promised out of the gate fully autonomous cars and he did not deliver and still has not delivered. It was a much bigger problem than even Elon imagined.
TSMC has 30+ years of experience building fabs and wafers. TSMC's success today is largely due to introducing disruptive technology in a safe and sane manner where customers can trust TSMC to meet their capacity requirements. That is the key to the foundry business model, trust.
So you have to ask yourself: Self, do you trust Elon Musk in regards to building a Terafab and yielding leading edge wafers in a fixed amount of time?
Nope.
It was interesting that Elon never mentioned Samsung even though they have a multi billion dollar agreement at 2nm.
The chances of Elon Musk being successful here within a fixed amount of time is infinitesimal. Elon/Tesla promised out of the gate fully autonomous cars and he did not deliver and still has not delivered. It was a much bigger problem than even Elon imagined.
1. Completely agrees on the first point. As a shareholder, I'm worried he's gonna burn all that cash for nothing. Creating another TSMC is indeed harder than going to Mars.
2. Do not agree on the second point. The latest Tesla cars with FSD is basically autonomous driving or 99.99% there. It drives itself out the garage and will auto park when arrives destination, all by itself. The only time you may touch the steering wheel is when you get in and get out . The main barrier for autonomous driving is gov regulations and general public fear (but once tried, I think most people will let go their hands on the wheel)
Terafab ≠ Giga Texas Fab: Elon Musk has clarified that the Advanced Technology Fab announced for Giga Texas is a separate, smaller facility focused on iterating chip designs — not the full Terafab project. The true Terafab will require thousands of acres and over 10GW of power at full scale, and no location has been confirmed yet, with several sites still under consideration.
UPDATE — March 22, 2026,xAI, located near Gigafactory Texas.
. The main barrier for autonomous driving is gov regulations and general public fear (but once tried, I think most people will let go their hands on the wheel)
Terafab ≠ Giga Texas Fab: Elon Musk has clarified that the Advanced Technology Fab announced for Giga Texas is a separate, smaller facility focused on iterating chip designs — not the full Terafab project. The true Terafab will require thousands of acres and over 10GW of power at full scale, and no location has been confirmed yet, with several sites still under consideration.
