Elon Musk has announced plans for a new semiconductor manufacturing facility called Terafab. This project is a joint venture between Tesla, xAI, and SpaceX, which merged earlier this year. The announcement took place on Saturday at a former power plant and signals a major move to bring chip production in-house as part of Musk’s larger artificial intelligence goals.
The project is ambitious in scale. Tesla expects to sharply increase its spending on new equipment in 2026, not including any costs related to Terafab. The name ‘Terafab’ comes from Musk’s goal to produce enough chips to use a terawatt of electricity each year, which is about the same as running one billion Nvidia Blackwell-class chips annually.
The production schedule is fast compared to industry norms. Musk aims to start making semiconductors by late 2027 and reach full production in 2028. This timeline is quicker than the usual three years it takes for traditional semiconductor plants to go from construction to production.
The main reason for the project is the expected shortage of advanced chips needed for new AI uses, such as self-driving cars and robotics. Musk expects that 80% of Terafab’s chips will be used in space, where SpaceX plans to run AI computing tasks that are now done by large data centers on Earth. The facility will use two-nanometer node technology, which is the latest in chip design.
Tesla’s stock price, which is about 190 times its expected 2026 earnings, shows that investors believe the company will earn much more from AI-related businesses in the future. These include its robotaxi service, which started in Austin, Texas last June, and its Optimus humanoid robot program, now in its third version.
Terafab is another long-term project for Musk’s companies. Although it is not expected to boost revenue or profits soon, it supports the idea that Musk is bringing his companies closer together. This ongoing consolidation keeps investors interested in Tesla as a possible leader in AI across cars, space, and computing.
Featured CoursesRecent news
D-Wave Stock Rises 2.7% Despite 81% Revenue Drop: Here’s Why
Despite D-Wave Quantum’s 81% revenue drop, shares rose 2.7% in premarket trading. Investors focused on a jump in bookings, indicating real business progress. Here’s a look at the numbers and why the company’s outlook matters more than its recent performance. First-quarter revenue fell to $2.86 million, down from last year and below the $4.2 million […]
GameStop Shares Drop 4.7% After eBay Turns Down $56B Takeover Offer
eBay swiftly rejected GameStop’s $56 billion takeover bid, calling it neither credible nor attractive. GameStop shares fell 4.7% in premarket trading. This decision raises questions about what it means for both companies and whether Ryan Cohen will give up or try again. Most investors were not surprised. Since the bid was announced, eBay’s stock traded […]
Hims Stock Drops 14.6% After Posting an Unexpected Loss
Hims and Hers Health’s latest results disappointed investors. Shares dropped 14.6% in premarket trading on Tuesday. The company posted a first-quarter loss, catching analysts off guard. They had expected a profit. Here’s a look at what happened, what the company’s guidance means for the future, and whether the stock’s sharp drop is justified. The subscriber […]
Trade with fewer limits
Day trade with fewer limits at fast speed. Buy stocks and ETFs at low fees.