Musk Announces Tesla's Giant AI Chip Megafactory "Terafab" to Break Ground Within Seven Days

On March 15, Reuters reported that Tesla CEO Elon Musk officially announced that the highly anticipated Tesla self-driving chip manufacturing project—“Terafab” super factory—will begin construction within seven days, aiming to completely solve the computing power bottleneck faced by its autonomous driving system and humanoid robot business.

Musk emphasized that external supply chain capacity can no longer meet Tesla’s explosive future computing power demands.

“Even if we assume the best-case scenario for supplier chip production, it’s still not enough,” Musk recalled. “To support the iteration of Full Self-Driving (FSD) software and the large-scale deployment of the Optimus robot, we need to produce hundreds of billions of chips annually. The traditional ‘Gigafab’ standard is no longer sufficient; we must build an unprecedented scale ‘Terafab.’”

It is reported that the concept for the Terafab project was first proposed at the end of 2025, planning to adopt advanced 2-nanometer process technology, with the goal of integrating logic chips, memory chips, and advanced packaging processes within the same campus. Musk has openly stated that the five-year construction cycle of traditional wafer factories is too slow, and Tesla plans to shorten factory construction time to under three years through innovative building techniques and cleanroom standards to enable rapid production.

While advancing its own factories, Tesla has not stopped collaborating with existing partners. Reports indicate that Tesla’s designed AI5 chips will continue to be manufactured by TSMC and Samsung Electronics. Musk previously revealed that although the two foundries differ in process details, Tesla’s engineering team is committed to ensuring seamless operation and consistent performance of AI software across different hardware versions.

According to the previous roadmap, Tesla expects to receive AI5 chip samples and begin small-scale trial production by 2026, with large-scale mass production planned to fully commence in 2027. The launch of the Terafab factory will be seen as a key accelerator for this roadmap, aiming to provide a solid capacity backup and technological validation base for large-scale production in 2027.