Musk launches 'Terafab' project to make own AI chips

The "Terafab", a manufacturing facility based near Austin, Texas, will aim to produce one terawatt of computing power per year, Musk said.

A terawatt is equivalent to one trillion watts. That is slightly less than the total power generation capacity of the United States, according to an industry group.

Musk said the project would be run jointly by his electric-vehicle firm Tesla and his rocket company SpaceX.

He did not disclose the initial investment. Previous US media reports have put the figure between $20 billion and $25 billion.

Musk, who has no prior experience in semiconductors, said the Terafab was necessary because Tesla and SpaceX's demand for computing power was expected to far exceed that of global chip suppliers.

"We're very grateful to our existing supply chain, to Samsung, TSMC, Micron, and others... but there's a maximum rate at which they're comfortable expanding," Musk said.

"That rate is much less than we would like... and we need the chips, so we're going to build the Terafab."

An "advanced technology fab" in Austin will have the facilities to design, manufacture, test and improve each chip, Musk said.

Eventually, the project aims to make chips to support 100 to 200 gigawatts of computing power on Earth, and a terawatt in space.

Musk did not give a timeline for the Terafab's output, and has previously promised grand results from other projects on compressed time scales.

He said the Terafab would ultimately help humanity become a "galactic civilization" capable of harnessing the resources of other planets and stars.