Elon Musk has announced the Terafab AI chip factory aimed at scaling next-generation computing infrastructure. The project reflects growing demand for advanced AI capabilities and Musk’s ambitious long-term vision.
The Tesla CEO unveiled the project during a live event at the Seaholm Power Plant in downtown Austin, Texas.
Elon Musk has unveiled details on his Terafab plans on Saturday (March 21, 2026) evening. "We're starting a galactic civilization," Musk said, speaking from the defunct Seaholm Power Plant in Austin.
Terafab is Musk's giant chip manufacturing venture along with his companies, Tesla and SpaceX. XAI is also included as the AI startup, which was acquired by SpaceX in February.
TeraFab's semiconductor manufacturing facility will build chips needed to power this future. The massive undertaking, which would bring together Tesla, SpaceX and xAI, has one goal: create a galactic civilisation so humans could become immortal in a way, their memories and ideas being preserved and passed on for generations to come.
The project is expected to cost between $20 billion and $25 billion, and the factory could eventually produce between 100 and 200 billion advanced 2-nanometre AI chips every year. This is a number far beyond what most current semiconductor fabs can deliver today.
These chips are expected to power self-driving Tesla cars, humanoid Optimus robots, and massive AI data centres in space.
Musk explained that TeraFab is designed to bring almost the entire chip-making process under one roof. The facility will handle logic chips, memory, packaging, testing, mask design, and continuous redesign loops within the same complex.
The chips produced at TeraFab will serve two main purposes. One category will be designed for Tesla products. Musk said Optimus could eventually be produced in far greater numbers than Tesla cars, which means the company will need a huge supply of custom AI processors to support it.
The venture will also produce D3 chips, which are designed specifically for space environments. These processors are intended to power orbital AI data centres that SpaceX could launch using its Starship rockets.
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Musk described the project as an attempt to build the computing infrastructure required for what he called a “multi-planetary” and eventually “galactic civilisation.”
According to him, the scale of AI computing needed in the future is so large that current chip production simply cannot keep up. This is the major reason behind bringing Tesla, xAI and SpaceX together to build a dedicated facility.
According to Musk, once the cost of sending hardware to space falls low, putting computing infrastructure in orbit will become the next logical step.
"So as soon as the cost to orbit drops to a low number, it immediately makes extremely compelling sense to put AI in space," he said. "It becomes a no-brainer, basically."
Musk believes that running AI in space could become cheaper than operating it on Earth, as satellites can use continuous solar energy.