Musk Plans Two Advanced Chip Fabs in Austin for Tesla and SpaceX

By Tahani Elghazaly
Published March 25, 2026

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Elon Musk has unveiled plans to build two advanced chip fabrication plants in Austin, Texas, underscoring his expanding bet on artificial intelligence, robotics, and large-scale computing across his companies. Reuters reported on March 22 that one fab would make chips for Tesla vehicles and the Optimus humanoid robot, while the second would produce chips for AI systems tied to space applications.

The announcement came a day after Musk described a broader Austin project called “Terafab,” an advanced chip complex he said had become necessary because existing supply cannot keep up with the future needs of his companies. Reuters reported that Musk said current global chip output would meet only a small fraction of expected future demand.

According to Reuters, the first fab would support Tesla vehicles and humanoid robotics, while the second would focus on high-powered chips designed to operate in harsher space-related environments and at higher temperatures. That gives the story its real weight: this is not simply a factory expansion, but an attempt to build dedicated manufacturing capacity for Musk’s automotive, robotics, and AI ambitions at the same time.

Musk also said he remains reliant on major suppliers such as Samsung, TSMC, and Micron, but argued that future demand from his companies could eventually exceed total global chip production. Reuters reported that he said Terafab could one day produce one terawatt of annual computing capacity, compared with roughly half a terawatt currently generated across the United States.

Still, the project remains at the announcement stage, and Musk did not provide a construction or launch timeline. That leaves room for caution, especially because advanced semiconductor fabs require vast capital, deep operational expertise, and long buildout periods before they can reach meaningful production scale.