# Elon Musk Terafab AI chip project

> Live situation record from CLSTR: https://clstr.news/situations/elon-musk-terafab-ai-chip-project
> Updated: 2026-10-20T17:19:41.000Z. Sources: 16. Developments: 2.

Elon Musk has announced Terafab, an ambitious initiative involving Tesla, SpaceX, and xAI to manufacture AI chips. Musk acknowledged limited technical knowledge in semiconductor manufacturing, stating, “To be honest, I don't know how to make chips. But we will find a way.” The strategy focuses on utilizing existing industry-standard equipment to identify bottlenecks and optimize throughput, similar to previous development models used at Tesla and SpaceX.

The project aims to achieve mass production by the third or fourth quarter of 2028, targeting an annual output of 1 terawatt of computing power for AI and robotics. The manufacturing operations are planned for an integrated complex in Texas designed for logic and memory chip production, packaging, and testing.

While Musk described the timeline as “extremely challenging” and “almost ridiculous,” the project has set an internal goal to produce functional test chips using SRAM circuits at an Austin-based R&D facility by mid-2027. Efforts to build a supply chain are underway, including discussions with approximately 10 Korean suppliers.

As of October 2026, the Terafab joint venture between SpaceX and Tesla is progressing toward its goal of large-scale semiconductor manufacturing. Musk has specified that the first functional SRAM test chips are targeted for May or June 2027 in Austin. To support these ambitions, the venture has received expedited equipment deliveries from vendors such as ASML. Musk estimated that capital equipment costs for Terafab will exceed tens of billions of dollars through early 2028, with long-term costs potentially exceeding $100 billion. Additionally, Musk revealed that SpaceX and Tesla are discussing a potential merger to better integrate their software, chip design, and robotics capabilities.

## Claims

- Tesla has started producing Optimus humanoid robots on a high-volume line in Fremont, California. (corroborated by 5 sources)
- The Terafab joint venture aims for volume chip production by the third quarter of 2028. (corroborated by 4 sources)
- Terafab aims to produce its first functional test chip by May or June 2027. (corroborated by 4 sources)
- Elon Musk expects it will take at least one year to reach a production capacity of 20,000 Optimus units per week. (corroborated by 2 sources)
- Terafab intends to produce one terawatt of computing power per year for AI and robotics. (single source)
- Capital equipment costs for Terafab are expected to exceed tens of billions of dollars through early 2028. (single source)
- Tesla plans to integrate the Tesla AI5 chip into the Optimus robot. (single source)
- Terafab is in discussions with approximately 10 Korean chip suppliers. (single source)
- SpaceX and Tesla have formed special committees to discuss a potential merger. (single source)

## Timeline

### 2026-10-20: Tesla and SpaceX advance Optimus production and Terafab chip project

Tesla has started production of Optimus humanoid robots in California, while the Terafab chip venture aims for its first test chips by mid-2027 and volume production by late 2028.

14 sources. https://clstr.news/cluster/elon-musk-targets-2028-mass-production-for-terafab-chip-project

### 2026-10-12: Elon Musk announces Terafab project to manufacture AI chips

Elon Musk plans to launch Terafab, a project aimed at manufacturing AI chips for Tesla, SpaceX, and xAI, by optimizing existing semiconductor manufacturing technology.

2 sources. https://clstr.news/cluster/elon-musk-announces-terafab-project-to-manufacture-ai-chips

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Cite as: Elon Musk Terafab AI chip project. CLSTR, https://clstr.news/situations/elon-musk-terafab-ai-chip-project