Terafab, a large semiconductor manufacturing project backed by Elon Musk, is set to launch in Austin, Texas. The facility is a joint effort between Tesla and SpaceX and is designed to produce advanced chips for artificial intelligence, robotics, and space-based systems.

The project is located near Tesla’s existing gigafactory in Austin. Musk aims to use the site to bring more chip production in-house, reducing reliance on external suppliers. The goal is to support growing demand from Tesla, SpaceX, and xAI, particularly as AI systems continue to scale.

Terafab will focus on producing 2-nanometer chips, one of the most advanced semiconductor nodes currently being pursued. The facility is expected to produce up to 200 billion chips per year, with an annual output target of around 1 terawatt of computing power. These chips will support Tesla’s Full Self-Driving systems, Optimus humanoid robots, and future robotaxi platforms.

The project will also include specialized chips for space applications. SpaceX and xAI plan to use radiation-hardened processors designed to operate in orbit. These systems are part of a broader effort to expand computing infrastructure beyond Earth, including satellite-based data centers.

Musk confirmed the official launch date as March 22, 2026, with a live broadcast scheduled for 8 PM Central Time on the SpaceX platform. The estimated cost of the project ranges from $20 billion to $25 billion, making it one of the largest semiconductor investments in the United States.

Terafab is designed to handle the full chip lifecycle in one location, including design, mask creation, manufacturing, testing, and packaging. This level of vertical integration is uncommon in the semiconductor industry and reflects Musk’s strategy to control both hardware and software development.

The project was first mentioned by Musk on March 14, 2026, when he stated that the Terafab launch would take place within a week. The announcement comes as demand for AI computing continues to rise, putting pressure on the global semiconductor supply chain.

Musk has also connected Terafab to a broader long-term vision. He stated that the facility will help support the development of a “galactic civilization,” including plans to deploy large-scale AI systems in low Earth orbit. According to Musk, the cost of computing in space may eventually fall below the cost of operating data centers on Earth.

Terafab represents a major step toward scaling AI infrastructure, combining semiconductor manufacturing, energy, and compute into a single system designed for both terrestrial and space-based applications.

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