Musk's TeraFab Aims to Build 1 Terawatt AI Chip Factory, Drawing Skepticism on Feasibility

Elon Musk announced an ambitious $20 to $25 billion semiconductor facility called TeraFab, designed to produce massive quantities of custom AI chips for Tesla, SpaceX, and xAI, signaling a major vertical integration play by companies historically dependent on external chip suppliers. The facility, planned for Austin, Texas, would target producing between 100 and 200 gigawatts of computing power annually on Earth and up to one terawatt annually for space-based data centers and satellites—an unprecedented volume in an industry where existing players struggle with chip shortages.