Elon Musk is rolling out a significant plan to build a $20 billion semiconductor factory, named Terafab, in Austin, Texas. This facility aims to meet the increasing demand for chips at Tesla, SpaceX, and xAI, Musk's AI venture.
It is to be situated close to Tesla's current gigafactory in eastern Travis County and will bring together chip design, fabrication, memory production, and packaging all under one roof.
Musk mentioned that Terafab could crank out up to one terawatt of computing power each year, which is enough for hundreds of millions of AI chips that can power everything from self-driving cars to humanoid robots and orbital systems. The facility is set to focus on advanced 2-nanometer chip production, a field currently dominated by big names like Taiwan Semiconductor Manufacturing Company and Samsung Electronics.
Musk pointed out that this project is crucial because outside suppliers aren't ramping up production fast enough to satisfy Tesla's needs, especially for the Optimus humanoid robots, the robotaxi fleet, and Full Self-Driving systems.
The company expects to kick off production by 2027, but experts think it might be 2028 or later before we see full-scale output of these advanced semiconductors due to how tricky and expensive it is to set up a fully functioning fabrication plant.
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May 08, 2026 15:50 ET Manufacturing and services sector survey results and labor market data from main economies were the highlight on the economics news front this week. Factory orders and jobs report dominated the news flow in the U.S. Similarly, industrial production data from German garnered attention in Europe. In Asia, purchasing managers’ survey results from China and the central bank decision from Australia were in focus.