Elon Musk, the Tesla chief executive officer (CEO), unveiled plans to build TerraFab, a supersized factory capable of producing 1 terawatt (TW) worth of in-house artificial intelligence (AI) chips annually. He judged that soaring AI demand will be hard to meet with existing semiconductor supply. All three corporations led by Musk—Tesla, SpaceX, and xAI—will take part in the project. Still, questions are being raised about its feasibility in terms of expense, technology, and time.
On the 21st (local time), CEO Musk revealed the TerraFab construction plan at Giga Texas, Tesla's factory in Austin, Texas. He plans to build the factory in Austin, where Tesla's headquarters is located, to produce chips for the Humanoid Robot Optimus and specialized chips that can operate in space environments. He said, "We will build a cutting-edge factory with all the core equipment to raise civilization's energy and computing scale by several steps."
The project will be carried out with Musk's three companies dividing roles. xAI will handle AI cluster control, Tesla will be in charge of chip design and manufacturing, and SpaceX is expected to handle space transport and securing solar-based power.
Behind TerraFab is a shortage of AI chips. CEO Musk said, "The semiconductor industry is ramping up production, but the pace is too slow to catch up with what's needed," and added, "Demand for Humanoid Robots alone will reach billions of units annually in the long term."
He ultimately set a goal of securing 1 TW of computing power per year. Given that global semiconductor corporations such as TSMC and Samsung Electronics currently produce about 20 GW, that is 50 times more. CEO Musk emphasized, "At this pace, we cannot meet demand," and said, "We need to build TerraFab because we need chips."
He went further, mentioning a vision for a "petawatt (PW) era," 1,000 times larger than the "terawatt (TW) era)." The plan is to build a forward base and factory on the moon to produce core AI chips, manufacture solar panels and structures locally using lunar resources, and continuously place an "orbital data center" into orbit based on that.
However, a skeptical view dominates the industry regarding its realism. Tesla has experience in semiconductor design but lacks advanced manufacturing experience such as 2-nanometer processes. Equipment needed for advanced processes is also in limited supply worldwide. Even now, Tesla designs chips and outsources production to foundries such as Samsung Electronics.
A semiconductor industry source noted, "With shortages of equipment, funding, and time, not only is it virtually impossible to build TerraFab in the short term, but also to establish a production system on par with TSMC." Bloomberg News also said, "Musk has a track record of making exaggerated remarks about goals and timelines in the past."
In response, CEO Musk said, "We will start small at first and expand gradually."