Tesla and SpaceX will build a massive factory for AI chip production in Texas

Elon Musk announced a “terafactory” for AI chips in Austin

On Saturday Musk confirmed his promise – detailed information about the project that will combine the efforts of Tesla and SpaceX will be revealed soon. The plan is to build a large semiconductor manufacturing facility right in Austin, Texas.

Why Austin?
- Tesla’s headquarters are already in the city (moved there in December 2021 after a conflict with California authorities).
- Texas has lower taxes and less stringent regulation, making the move of “the richest person on Earth” a logical step.
- Austin has become the production hub for Tesla cars and future humanoid robots Optimus.

What will be produced?
Musk announced that the initial phase of the project is to create an advanced technology laboratory with full infrastructure for chip development and testing.
- This will meet the demand of xAI, an AI startup owned by SpaceX after its acquisition in 2024.
- In the future the facility will be able to produce up to 1 TW of computing power in near‑Earth space (initial stages – from 100 GW to 200 GW on Earth).

Technologies and goals
- The plan is to release 2‑nm chips, but Musk has not yet confirmed exact specifications.
- At a Texas presentation (with Governor Greg Abbott) it was shown that the factory will specialize in two types of chips:
- Peripheral chips for onboard systems of electric vehicles and robots.
- High‑performance chips for data centers (DCs), including space platforms.
Musk presented a sketch of a compact satellite DC consuming up to 100 kW of power; this figure could rise to 1 MW in the future.

Financing
- SpaceX plans to raise at least $50 billion to implement the project.
- Additional funds will come from revenue from the company’s planned IPO this year.

Summary
Elon Musk does not cancel cooperation with external chip suppliers (Tesla, Samsung, etc.). He believes that only joint industry efforts can meet the growing demand for semiconductors for AI infrastructure.

Thus, the “terafactory” in Austin will become a key element of Musk’s strategy to create an autonomous supply chain of high‑technology chips and expand Tesla’s and SpaceX’s capabilities both on Earth and beyond.