Tesla to Launch Chip Fab Project Named Terafab in Seven Days

Tesla CEO Elon Musk announced on March 14 that the company's Terafab chip fabrication project will launch in seven days, marking a major step in Tesla's push for vertical integration in semiconductor manufacturing. The facility, estimated to cost approximately $25 billion as part of Tesla's record capital expenditure plan for 2026, is designed to produce between 100 and 200 billion custom AI and memory chips per year, targeting 2-nanometer process technology — the most advanced node currently in commercial production.

The Terafab project represents TSLA's ambitious effort to reduce dependence on external chip suppliers like TSMC and NVIDIA for its AI hardware needs. Tesla's fifth-generation AI chip, AI5, is among the first products Terafab is designed to produce, with small-batch production expected in 2026 and volume production projected for 2027. The initial target is 100,000 wafer starts per month, with ambitions to scale toward one million.

While the "launch" likely refers to a groundbreaking ceremony or formal project announcement rather than an operational fab, the move signals TSLA's determination to control its own chip supply chain at a time when AI compute demand is surging across the industry. Investors will be watching whether Tesla can execute on this massive capital commitment while simultaneously scaling its vehicle production and Optimus robot programs.