It is about the launch of the Terafab project – one of the most ambitious in the history of Tesla. It involves the creation of its own production of chips for artificial intelligence, according to investors.com.
The project is scheduled to start on March 21, 2026, which marks a sharp turn of the company to deep vertical integration and may change the balance of power in the global semiconductor market, the publication notes.
The initiative aims to reduce Tesla’s dependence on external suppliers – including TSMC and Samsung – and fulfill its computing needs for electric vehicles, autonomous driving and robotics.
Scale and timing: ambition vs. reality
According to Tesla CEO Ilon Musk, the company is being forced to go in-house because of the looming shortage of computing power: “To address the likely constraints in three to four years, we will have to build a Tesla Terafab – a very large factory,” the billionaire is quoted by investors.com as saying.
The project involves creating an integrated manufacturing facility that includes logic chips, memory and packaging within a single site.
According to analysts’ estimates, the initial investment may amount to $30-45 billion, and in case of scaling up – up to hundreds of billions of dollars, which is comparable to the largest infrastructure projects in the global semiconductor industry.
Analysts emphasize that Tesla sees Terafab as a key element of its AI strategy. According to the company’s internal estimates, demand could reach 100-200 billion chips annually, primarily for autonomous cars and Optimus humanoid robots.
In production terms, we are talking about a capacity of up to 1 million silicon wafers per month, potentially making the project one of the largest in the world.
At the same time, Musk claims an extremely aggressive timeline for realization:
“If we don’t build Terafab, we will be limited to chip suppliers,” he declares.
However, analysts doubt the feasibility of such plans. According to Morgan Stanley, the launch of full-scale production may be delayed until 2028, and the project itself has already been called a “Herculean task”.
Market Reaction and Risks
The fact that investors do not really believe the ambitious plans of Ilon Musk and the reality of the indicated terms of investment and reaching maximum production capacity is evidenced by the market reaction. So far, it is extremely restrained, if not to say – none at all. Tesla shares rose by about 1.1% after the announcement of Ilon Musk.
According to the author of an article in investors.com, market participants are alarmed by: the potential growth of Tesla’s capital expenditures (over $20 billion in 2026, excluding Terafab); the risk of negative free cash flow; and Tesla’s lack of experience in semiconductor production.
Nevertheless, the project could become a key element of Musk’s long-term strategy to turn Tesla into a company in the field of artificial intelligence, not just an automaker.
In this regard, it is possible that after the first successes of Terafab, investor sentiment toward Tesla shares will change, the publication notes.
