Musk Unveils $25B 'Terafab' Semiconductor Facility; Tesla, SpaceX, and xAI to Consolidate Chip Production in Austin

Elon Musk announced 'Terafab,' a $25 billion semiconductor fabrication facility in Austin targeting 1 terawatt of annual compute capacity — what he claims will be the largest chip fab ever built. The joint Tesla-SpaceX-xAI venture will produce inference chips for Tesla vehicles and Optimus robots, plus D3 chips for orbital AI satellites. Musk cited supplier capacity constraints: 'All current fabs on Earth produce only about 2% of what we would need.' The facility targets 2nm process technology and aims to reduce dependence on TSMC and Samsung. Musk acknowledged the project signals desperation over AI compute supply.