Musk Pushes Tesla and SpaceX to Test Ten Chip Designs a Year at Texas Terafab

Elon Musk has once again tossed a curveball at the chip industry. In a recent interview he said Tesla and SpaceX intend to churn out roughly ten new chip designs every year inside a dedicated research fab he calls Terafab, located at the Giga Texas campus.

The idea isn’t to launch ten different products into mass production. Instead, Musk is talking about a rapid‑cycle “design‑make‑test‑repeat” loop that could shrink a process that normally takes two years into something much tighter. He called it a high‑risk, high‑payoff gamble – the kind of gamble he seems to love.

What makes this proposal interesting is the notion of a “complete loop” under one roof. In the same building, engineers could fabricate a prototype, run functional tests, spin new lithography masks and spin up a revised version without having to wait for an external foundry. “Some of the experiments will fail, sure, but the speed at which we can iterate is the real advantage,” Musk said.

Even though Musk freely admits he isn’t a chip‑making expert – “I have no idea how to make chips, but we’ll figure it out,” – he’s confident the effort will eventually pay off. The plan is to start with off‑the‑shelf equipment, tweak it for higher throughput, and eventually build custom machines to solve the bottlenecks that normally slow down semiconductor production.

Terafab isn’t just a sandbox for trial‑and‑error. The broader vision includes two full‑scale factories, each dedicated to a single, flagship chip design – one for Tesla’s electric‑vehicle power‑train and AI workloads, the other for SpaceX’s onboard computers and the upcoming Optimus robots. Intel has already pledged its 14A process for the first wave of chips, and talks with TSMC are reportedly ongoing.

Speaking of TSMC, the Taiwanese giant has been circling Texas for a while. After reassuring Musk in late‑2024 that supply would be guaranteed for a price, senior TSMC executives met with Texas officials in early 2026 to discuss a possible fab. Musk hinted that a portion of Terafab could be sub‑leased to TSMC, giving the foundry a strategic foothold while the Musk‑led projects stay in‑house.

Market reaction has been modest but noticeable. Tesla shares nudged up 0.6% after the news, while SpaceX’s parent company saw a 1.2% rise. Retail sentiment on platforms like Stocktwits remains mixed – bearish on Tesla, neutral on SpaceX – reflecting both excitement about the ambition and caution about the execution risk.