Billionaire Elon Musk said that Tesla and SpaceX will build an advanced chip facility in Austin, Texas, to help power the two companies’ emerging technologies amid a shortage of chips.

“Terafab will technically be two fabs, each making only one chip design,” Musk wrote Sunday in a post on X. 

One of Terafab’s facilities will be focused on AI chips for Tesla’s electric vehicles and Optimus humanoid robots, while the other will be focused on AI chips for space-based data centers made by SpaceX. 

Musk said that the Terafab chips will be necessary to meet his companies’ demand for computing power that exceeds what it can obtain from suppliers.

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Elon Musk said that Terafab will focus on two chip designs: one for Tesla’s EVs and Optimus humanoid robots, and another for SpaceX’s space-based data centers. (Aly Song/Reuters)

“We either build the Terafab or we don’t have the chips,” Musk said during a presentation in an Austin facility on Saturday, adding that current global chip production would meet only a small fraction of his companies’ future needs.

Musk thanked the companies’ existing chip suppliers, including Samsung, TSMC and Micron, but said that the demand from his companies would eventually exceed total global chip output, prompting the need for the new AI chip plant.

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Musk also said that SpaceX’s AI chip for space-based data centers will need to have special characteristics to withstand the environment in space and function as intended.

“We need a high‑powered chip designed for space that takes into account the harsher environment in space, where you’ve got high power, high energy ions, photons, you’ve got electron build up,” Musk said, adding it would need to operate at higher temperatures.

“It’s a hostile environment in space,” Musk explained. “You want to optimize it for space, and you also want to generally run it a little hotter than you would normally run a chip on Earth to minimize the radiator mass.” 

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Musk expects Terafab to greatly expand the production of AI chips and computing capacity. (Marc Piasecki/Getty Images)

Musk did not give a timeline for the new project. Musk has a track record of announcing highly ambitious projects, though several have faced delays or fallen away.

Terafab will eventually produce one terawatt of computing capacity a year, compared with about half a terawatt currently generated across the U.S., Musk said.

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Reuters contributed to this report.