Elon Musk just announced a $25,000,000,000 chip factory built by Tesla, SpaceX, and xAI that will eventually move 80% of its computing power into space

Elon Musk has announced plans to build a $25 billion, first-of-its-kind ‘Terafab’ chip manufacturing facility that will be the biggest in the world.

The Terafab will be built as a joint venture between Musk’s SpaceX, Tesla, and xAI. 

The facility will build chips for Tesla EVs and Optimus Robots. 

But Musk has also announced that it will be ‘the next step towards becoming a galactic civilization’, and will also create chips designed for space. 

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Musk said the Terafab facility will produce hundreds of billions of chips every year

Musk is no stranger to sharing ambitious plans, even if they don’t quite end up coming to fruition.

Like the time he hastily revised the size of his Robotaxi fleet in Austin, or when he said back in 2011 that SpaceX could be landing people on Mars in just 10 years’ time, but now seems to have turned his attentions to the Moon.

However, this time around, it seems as though Musk is going all in with plans to build a supersized Terafab. 

The new facility will be the biggest semiconductor manufacturing plant in the world.

It will provide a place to create chips, test them, and improve them, all from one place – a setup that Musk said currently ‘does not exist anywhere in the world’. 

Once it’s up and running, Musk said it will be capable of producing between 100 and 200 billion AI and memory chips per year. 

Most of which will be used by Tesla in its cars and Optimus bots, which the company says it will build a million of each year in the not-too-distant future.

Currently, Tesla gets its chips from several suppliers, including Samsung and Micron, but Musk said in a recent livestream that these companies have set themselves a ‘maximum rate’ at which they’re happy to scale up. 

“That rate is much less than we would like,” he said.

“And so, we either build the Terafab, or we don’t have the chips.”

A post shared by Tesla said the factory will ultimately be able to manufacture one terawatt of chip output every year – making it larger than all the other chip manufacturers combined.

It’ll also build a chip used to power space travel

The chips created at the Terafab facility will go into Tesla cars and robots, but others will be used for SpaceX spacecraft to fuel future space exploration. 

In fact, Musk suggested that around 80 percent of the plant’s output will be sent into space and used on SpaceX’s solar-powered AI satellites.

The chips on these satellites will need to perform a little differently than those intended to go into EVs, so they can handle the more challenging conditions of space travel. 

“We need a high-power chip that is designed for space that takes into account the difficult environment in space, where you’ve got high power, high energy ions, photons, you’ve got electron build up,” Musk said. 

“It’s a hostile environment in space … you want to optimize it for space, and you also want to generally run it a little hotter than you would normally run a chip on Earth to minimize the radiator mass.”

Musk said the plant will help play an integral role in building a ‘galactic civilization’.

“We want to make that real,” Musk said.

“Not just fiction – to turn science fiction to science fact. That’s the glorious, exciting future that I certainly look forward to.”

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