Elon Musk unveiled Terafab on Saturday night at a defunct power plant in Austin, Texas. The project is a joint venture between Tesla, SpaceX, and xAI, and it aims to bring every stage of semiconductor production under one roof.
The facility is planned for the North Campus of Giga Texas, in a building that would dwarf the already massive Giga Texas structure — one of the largest buildings on Earth.
Terafab will target two chip types. One is an edge-inference processor for Tesla’s Full Self-Driving systems, Optimus robots, and Robotaxi fleets. The other is a hardened variant built for space, supporting SpaceX satellites and orbital data centers.
Tesla, Inc., TSLA
Tesla stock closed at $380.85 on Monday, up 3.5% on the day. The S&P 500 rose 1.2% and the Dow gained 1.4%, as markets broadly moved higher after President Trump said the U.S. and Iran held talks on easing Middle East tensions.
The numbers behind Optimus are eye-catching. Morgan Stanley analyst Andrew Percoco noted that Giga Texas alone is expected to have capacity for 10 million humanoid robots per year. That would require 20 million chips — roughly six times Tesla’s current chip demand across its entire auto business.
If Tesla hits its long-term target of 100 million Optimus robots annually, that figure climbs to over 200 million chips — more than 50 times its current combined demand for automotive and Robotaxi.
Musk’s stated ambition is to produce more than one terawatt of AI computing power per year. He believes 80% of Terafab’s output will ultimately go to space, where SpaceX plans to run AI computing that hyperscalers currently handle on Earth.
Barclays analyst Dan Levy called the scale of Musk’s targets far beyond what anyone had expected. “With a target of 1 terawatt of compute capacity, it would be 50 times current global AI compute,” Levy wrote.
Morgan Stanley’s Percoco called Terafab the right strategic move, while flagging the cost. He estimates total capital investment at $35–$45 billion. The initial $20–$25 billion figure Musk cited does not include Terafab in Tesla’s current 2026 capex plans.
Terafab will pursue 2-nanometer process technology — the most advanced node in the world, one that TSMC is only now beginning to produce at scale. Morgan Stanley projects first chip output would not come before mid-2028 under even an aggressive build schedule.
Musk provided no firm construction timeline or production milestones. He said the project would begin with prototyping and infrastructure testing.
Tesla, Inc., TSLA
Coming into Monday’s session, Tesla stock was down 18% year to date and up 48% over the past 12 months. The stock trades at roughly 190 times estimated 2026 earnings.
SpaceX merged with xAI earlier this year and may IPO as soon as this spring.
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