Finance
Factbox-Elon Musk Lays Out Terafab AI Chip Project Plan
Published by Global Banking & Finance Review®
Posted on April 23, 2026
4 min readLast updated: April 23, 2026
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Elon Musk’s Terafab is a massive AI-focused chip project by Tesla, SpaceX and xAI—now joined by Intel—which aims to produce a full terawatt of compute annually using Intel’s 14A process, starting with a research fab in Austin.
Elon Musk Announces Terafab AI Chip Project Plan with Intel 14A in Texas
Overview of the Terafab AI Chip Project
Introduction and Announcement
April 23 (Reuters) - Tesla chief Elon Musk said on Wednesday the electric vehicle maker plans to use Intel's next-generation 14A manufacturing process to make chips at its Terafab project, an advanced artificial-intelligence chip complex Musk has envisioned in Texas.
What is the Terafab Project?
WHAT IS THE TERAFAB PROJECT?
Project Scope and Participants
Musk's SpaceX, its xAI unit and Tesla will build two advanced chip factories at a sprawling facility in Austin, one to be used in Tesla vehicles and Optimus humanoid robots, and another designed for AI data centers in space.
Necessity and Demand
"We either build the Terafab or we don't have the chips," Musk had said during a presentation in Austin in March, adding that current global chip production would meet only a small fraction of his companies' future needs.
Musk said he was grateful to existing chip suppliers, naming Samsung, TSMC and Micron, but said demand from his companies would eventually exceed total global chip output.
Timeline and Partners
He did not give a timeline for the project and has a track record of announcing highly ambitious projects, though several have faced delays or fallen away.
Intel announced it would join the project in April, bringing established chip manufacturing expertise to the venture.
Location and Scale
LOCATION AND SCALE
Production Process and Facility Details
Musk has said the Terafab will handle each step of chip production, including the design.
On Tesla's earnings call on Wednesday, Musk said that the details of the Terafab deployment are still being worked out.
Initial Phase and Investment
In the near term, Tesla will be building the research fab on its Giga Texas campus in the Austin area. The initiative is expected to cost about $3 billion and "capable of maybe a few thousand wafers per month, but it's really intended to try out ideas," Musk said.
"What we figured out thus far is Tesla doing the research fab, SpaceX doing the initial part of the large-scale Terafab. And then we got to figure out the rest," he said.
Long-Term Goals and Capacity
Terafab will eventually produce one terawatt of computing capacity a year, compared with about half a terawatt currently generated across the United States, Musk had said in March.
Building enough chip capacity to power one terawatt of annual compute would cost between $5 trillion and $13 trillion in capital expenditure, according to Bernstein estimates.
Technology
TECHNOLOGY
Intel 14A Manufacturing Process
Tesla plans to use Intel's 14A manufacturing process to make chips at the Terafab project. The contract would mark Intel's first major customer for the technology, a breakthrough for the chipmaker which has struggled to stand up its contract manufacturing business essential for taking on top rival TSMC.
Musk said that by the time Terafab scales up, Intel's 14A manufacturing process "will be probably fairly mature or ready for prime time" and "seems like the right move."
Supplier Engagement
Musk's staff have reached out to chip industry suppliers, including Applied Materials, Tokyo Electron and Lam Research, and Samsung for the Terafab project, according to Bloomberg.
Staff have sought price quotes and delivery times for an array of chipmaking gear, Bloomberg reported last week, adding that in the past few weeks, they have contacted makers of photomasks, substrates, etchers, depositors, cleaning devices, testers and other tools.
SpaceX GPU Development
Reuters reported that SpaceX is planning to make its own graphics processing units, or GPUs, the chips at the heart of training AI models.
The "Unknowns"
THE "UNKNOWNS"
Outstanding Questions
Though Musk has said Terafab would target chips for cars, humanoid robots and space-based data centers, many details are unknown, such as:
Key Uncertainties
• Who will pay for pricey chipmaking equipment
• Who will operate the factory
• When it will come online
(Reporting by Juby Babu in Mexico City; Editing by Maju Samuel)
Key Takeaways
- •Terafab is a planned vertically integrated fab in Austin targeting 1 TW of AI compute annually, spanning chips for Tesla vehicles, Optimus robots and space‑based AI data centers (estimated cost $20–25 billion; full scale may cost up to $5 trillion) (voxfor.com)
- •Intel has officially joined the Terafab venture, becoming the first key external customer for its advanced 14A node—a major boost for its foundry ambitions (techcrunch.com)
- •Tesla will deploy Intel’s 14A process at Terafab’s pilot research fab on Giga Texas; Musk expects 14A to be mature “when Terafab scales up,” although no firm timeline was provided (investing.com)
References
Frequently Asked Questions about Factbox-Elon Musk lays out Terafab AI chip project plan
1What is the Terafab project?
Terafab is an advanced AI chip complex envisioned by Elon Musk, involving Tesla, SpaceX, and xAI to build chip factories in Austin, Texas for vehicles, robots, and AI data centers.
2Which manufacturing process will Terafab use?
Terafab will use Intel's next-generation 14A manufacturing process to produce AI chips.
3Where will the Terafab chip factories be located?
The Terafab chip factories will be built at a facility in Austin, Texas, including Tesla's Giga Texas campus.
4What is the expected scale and cost of the Terafab project?
The research facility is expected to cost about $3 billion initially, with long-term capital expenditure for large-scale production estimated between $5 trillion and $13 trillion.
5What are some unknown aspects of the Terafab project?
Unanswered questions include who will fund the equipment, who will operate the factory, and when it will begin operations.
