“We either build the Terafab or we don’t have the chips.” Elon Musk said that on a stage in Austin on 21 March, and the shift underneath the line is hard to miss: the world’s most valuable chip customers are deciding to become chipmakers.
The plan, as Reuters reported it a day later, calls for two advanced fabs on one sprawling Austin site. Each makes a single chip design. One goes into Tesla cars and Optimus humanoid robots. The other is built for AI data centers in space, and Musk said it has to tolerate harsher conditions and higher operating temperatures. He gave no timeline, and Reuters pointed out that several of his earlier grand projects have been delayed or dropped.
The scale of the ask
Musk’s target is one terawatt of computing capacity a year. For comparison, he said the United States generates about half a terawatt today. He also told the audience that current global chip production would cover only a small slice of what his companies will eventually need, while praising suppliers Samsung, TSMC and Micron.
The price tag surfaced in May. A public hearing notice in Grimes County, Texas, where the prospective facility would sit, put the first phase at no less than $55 billion and the full buildout at up to $119 billion. SpaceX, which now owns xAI, was asking the county for a property tax abatement, with a hearing set for 3 June. Tax filings with two local school districts later described four phases and a goal of 1 million wafers a month within a decade, according to the Korean outlet The Elec.
Who is in
Terafab is a joint effort of Tesla, SpaceX and xAI. SpaceX will handle the initial phase of the scaled-up plant, Musk said on Tesla’s earnings call. Tesla, meanwhile, plans a research fab at its Austin factory for around $3 billion, “capable of maybe a few thousand wafers per month.”
Intel joined in April, the first big outside commitment for its foundry side, which until then had made chips only for its own products. Musk said Tesla intends to use Intel’s coming 14A process. Intel’s stock more than doubled in April, its best month ever, according to CNBC.
Analyst Ben Bajarin of Creative Strategies called it a “15-year strategy.” His reasoning: with Nvidia and Apple reserving TSMC capacity years ahead, Musk’s companies would struggle to get priority there. And, he added, nobody wakes up one day and decides to be a foundry.
That is the open question hanging over the whole thing. The Elec noted that no fab has ever turned out 1 million wafers a month purely for its owner’s use, and that Musk has never run a chip plant. In October he reportedly admitted he does not know how to make chips himself, though he expects his teams to do it better than anyone.
Watch the Grimes County hearings and the first wafers from that Austin research fab. They will show whether the terawatt goal is a plan or a slogan.
Sources
- Musk says SpaceX and Tesla to build advanced chip factories in Austin | Reuters
- Elon Musk's SpaceX chip fab in Texas to cost up to $119 billion | CNBC
- Can Elon Musk’s $119 Billion Terafab Chip Plant Pay Off Without Outside Customers?
