{"id":362170,"date":"2026-03-24T07:47:15","date_gmt":"2026-03-24T07:47:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/362170\/"},"modified":"2026-03-24T07:47:15","modified_gmt":"2026-03-24T07:47:15","slug":"what-it-is-and-why-its-important-for-tesla-and-spacex","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/362170\/","title":{"rendered":"What it is, and why it’s important for Tesla and SpaceX"},"content":{"rendered":"\n

Over the weekend in Austin, Texas, Tesla (TSLA<\/a>) and SpaceX (SPAX.PVT<\/a>) CEO Elon Musk unveiled what might be his grandest overarching vision for where he sees his companies headed.<\/p>\n

The project is called Terafab<\/a>, a joint venture between Musk\u2019s Tesla, SpaceX, and xAI, designed to consolidate every stage of semiconductor production under one roof \u2014 including chip design, fabrication, memory production, and packaging. Terafab will be built on the North Campus of Giga Texas, in a building planned to dwarf that of Giga Texas, already one of the biggest buildings on Earth.<\/p>\n

Initial costs are in the $20 billion to $25 billion range, with Musk noting that Tesla\u2019s capital expenditures for 2026 do not include Terafab costs. The timing is also interesting given SpaceX may IPO as soon as this spring.<\/p>\n

\"Tesla's Tesla’s new Terafab would be located in Austin, Texas. \u00b7 SpaceX <\/p>\n

That being said, Musk called Terafab “the most epic chip-building exercise in history by far,\u201d adding that he is pursuing the project because chipmakers like TSMC (TSMC34.SA<\/a>) and Samsung (005930.KS<\/a>) aren\u2019t making chips fast enough for his companies\u2019 AI and robotics needs.<\/p>\n

\u201cWe either build the Terafab or we don\u2019t have the chips, and we need the chips, so we build the Terafab,\u201d he said. \u201cThere\u2019s a maximum rate at which they\u2019re comfortable expanding. That rate is much less than we would like.\u201d He went further, claiming that current AI compute output is roughly 20 gigawatts per year and that the rest of the world\u2019s output is about 2% of what his companies need.<\/p>\n

Terafab targets two primary chip types: an edge-inference processor optimized for Tesla’s Full Self-Driving systems, Optimus humanoid robots, and Robotaxi fleets, and a high-power variant hardened for space environments, supporting SpaceX satellites, orbital data centers, and xAI initiatives.<\/p>\n

\"The The metrics and scale of the projects SpaceX and Tesla want to hit over the next few years. \u00b7 SpaceX <\/p>\n

The Optimus program is the single biggest driver of demand. Morgan Stanley analyst Andrew Percoco wrote in a note last week that Giga Texas alone is expected to have capacity for 10 million humanoid robots per year, which would require 20 million chips \u2014 approximately six times Tesla\u2019s current chip demand for its entire auto business.<\/p>\n

And if Tesla hits its stated long-term target of 100 million Optimus robots annually, it would require more than 200 million chips, or over 50 times its current demand across automotive and Robotaxi combined.<\/p>\n

Interestingly, Terafab will pursue a 2-nanometer process technology, the most advanced in the world and one that established players like TSMC are only beginning to make.<\/p>\n

Musk\u2019s stated goal is to produce more than a terawatt \u2014 1 trillion watts \u2014 of AI computing power per year, with most of that capacity ultimately destined for space. He provided no firm timelines for construction, output, or full-scale operation but indicated that the project would begin with prototyping and testing of infrastructure.<\/p>\n

That being said, Morgan Stanley\u2019s Percoco believes Terafab is the right move, despite the huge upfront costs.<\/p>\n

\"The The different kinds of chips that Terafab would theoretically produce for various uses. \u00b7 SpaceX <\/p>\n

As Tesla expands its AI ambitions across full self-driving (FSD), Robotaxi, and Optimus, \u201caccess to AI compute is increasingly emerging as a potential constraint\u201d \u2014 and that internal capacity would be aimed at supporting Musk\u2019s own in-house initiatives, rather than external customers.<\/p>\n

But the build-out of Terafab would be \u201ca Herculean task,\u201d noting that advanced logic processes like 2-nanometer tech are built upon decades of prior incremental gains.<\/p>\n

Then there\u2019s the cost. Morgan Stanley said building meaningful chipmaking capacity would require roughly $35 billion to 45 billion in total capital investment.<\/p>\n

Musk, as ambitious as he is, has no background in semiconductor production and a history of overpromising on goals and timelines.<\/p>\n

But Musk leaned directly into skepticism at the event, challenging doubters by pointing out that Tesla and SpaceX defied critics who predicted electric cars and reusable rockets would not be feasible or economical.<\/p>\n

Terafab chips would be needed at scale to boost Tesla\u2019s autonomous and robotics projects, as well as for SpaceX, as its orbital data centers are a big piece of its growth prospects \u2014 just as the IPO nears.<\/p>\n

If the past is prologue, Musk could prove his doubters wrong with Terafab’s success, or more realistically, prove that the future may be further out than he thinks is realistic.<\/p>\n

Morgan Stanley projected that even under an aggressive build-out, initial chip output from Terafab would not occur until mid-2028 at the earliest.<\/p>\n

Pras Subramanian is Lead Auto Reporter for Yahoo Finance. You can follow him on X<\/a> and on Instagram<\/a>.<\/p>\n

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