Musk Says Tesla and SpaceX Will Manufacture Chips at "Trillion Dollar Factory"

Elon Musk also showcased a rendering of a satellite, stating that it is part of SpaceX’s ultimate plan to build a massive orbital data center.

Elon Musk said that Tesla and SpaceX will jointly build a “Terafab” in Austin to design and manufacture semiconductors for both companies, but he did not disclose a timeline for the project.

During a live event in Austin on Saturday, Musk mentioned that this factory will be located next to Tesla’s existing Austin headquarters and will eventually produce two major types of chips: one tailored for Tesla’s autonomous taxis, Cybercab, and the Optimus humanoid robots, and another for aerospace applications. Currently, Tesla vehicles are equipped with Samsung’s AI4 chips, and SpaceX’s xAI is a major customer of Nvidia.

Musk previously stated that Tesla is considering building its own chip factory because existing suppliers like TSMC lack the capacity to support Tesla’s future plans. Despite Tesla’s electric vehicle sales declining for two consecutive years, Musk has repeatedly emphasized that new projects like Cybercab, Optimus robots, and space data centers will see significant growth. During Saturday’s presentation, a slide showed Tesla’s plan to produce 1 billion Optimus robots.

Musk also displayed a rendering of a satellite called “AI Sat Mini,” claiming it is part of SpaceX’s final plan to create a giant orbital data center. He said this satellite can generate 100 kilowatts of power using solar energy. This means SpaceX would need to launch thousands of such satellites to reach the computing power level of its AI company, xAI, which already has data centers on Earth.