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Many still donโt understand why Elon is building Terafab
Terafab is an extension to all the chip makers in the world
Itโs not about replacement, not a rivalry and absolutely not competing
Itโs being built to fulfill the massive chip orders that Tesla, SpaceX and xAI actually need
TSMCโs most advanced 2nm capacity is totally booked through 2028
Tesla signed a massive $16.5 billion deal with Samsung back in July 2025 to produce AI6 chips at their Taylor, Texas factory and Samsung is building a Tesla Exclusive chip manufacturing plant to full fill this orders
When Elon announced Terafab on March 21, 2026...he made it clear:
โThat rate is much less than weโd like. We either build the Terafab or we donโt have the chips, and we need the chips, so we build the Terafabโ
He basically told the chip makers:
โProduce as much as you comfortably can. We will take them all. Actually we want even moreโ
Even today Elon said:
"SpaceX/Tesla will be always be major customers of TSMC and not competitors in the normal sense of the word"
Current production rates are much less than they need....Thatโs why Terafab exists
Terafab is an extension to every chip makerโฆ not competition, not rivalry, absolutely not
Even Intel has joined as a partner
Even if chip supply improves, massive bottlenecks still exist with memory and advanced packaging
You simply can't risk those supply chain breaks at this scale
Thatโs why Terafab is being built to vertically integrate everything - chips, memory, advanced packaging
all under one roof, targeting 1 terawatt of AI compute capacity per year
This is a ludicrous amount of chips that no chipmaker currently produces at this scale. I don't think even TSMC and Samsung truly understand these numbers yet
Itโs about building the capacity the future actually demands