SpaceX has announced plans to open an advanced chip manufacturing facility in Austin, Texas.

The Terafab complex will consist of two separate chip fabrication plants, each dedicated to producing a single chip design. One facility will manufacture chips for Tesla vehicles and Optimus humanoid robots, while the other will produce chips intended for artificial intelligence data centers operating in space.

The facility is expected to generate up to one terawatt of computing capacity annually, significantly exceeding the current U.S. output of roughly half a terawatt. The chips designed for space applications will be engineered to operate in harsher environments, including higher temperatures, to support AI satellite systems.

The project, expected to cost upward of US$20 billion, is a collaboration involving SpaceX, Tesla, and xAI, reflecting a broader strategy to meet internal demand for advanced semiconductors. According to Musk, existing global chip production would only satisfy a small portion of the future needs of his companies, necessitating in-house manufacturing capabilities.

Initially, the Terafab will be a massive chip manufacturing plant located next to Tesla's Giga Texas in Austin, with chip design, lithography, fabrication, memory production, packaging, and testing all projected to take place under one roof. 

In a recent quote, Elon Musk, CEO, Tesla and SpaceX, said, "we either build the Terafab or we don’t have the chips, and we need the chips, so we build the Terafab.”

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