Musk’s factory marks a new phase in the global chip race
SpaceX and Tesla are investing $25 billion in US chip manufacturing.
Published on March 23, 2026
Masterstudente journalistiek aan de RUG, stagiair bij IO+, schrijft graag over de integratie van AI in het dagelijks leven
The global race for semiconductors is evolving along two very different strategies. On the one hand, Elon Musk is betting heavily on the future of artificial intelligence with his Terafab project. On the other hand, Europe is primarily focused on protecting its existing industries by investing in established chip technologies.
$25 billion for chips
With an investment of between $20 billion and $25 billion from Tesla and SpaceX, Musk plans to build a semiconductor fabrication plant in Texas. This so-called Terafab is intended to mass-produce the world’s most advanced 2-nanometre chips.
These chips are designed for internal applications across Musk’s companies, ranging from self-driving cars and robots at Tesla to large-scale AI infrastructure.
His plan to manufacture chips in-house is not without risk. Neither Musk, the CEO of both companies, nor the companies themselves have experience in chip fabrication, according to a Bloomberg report. Nevertheless, Musk aims to use Terafab to produce these advanced 2-nanometre chips.
Chip development is too slow
Tesla has already reached an agreement with a Samsung Electronics facility near Austin, Texas, for future chip production. The carmaker also works with existing suppliers, including TSMC and Micron Technology. However, according to Musk, they can no longer fully meet growing demand, as Tesla increasingly focuses on robotics, autonomous driving, and AI.
Terafab is intended to produce chips capable of supporting between 100 and 200 gigawatts of computing power per year on Earth. Chips designed to support up to one terawatt of computing power per year in space are also planned.
Europe opts for stability
Musk’s factory marks a new phase in the global competition for semiconductor dominance between the United States and Europe. How does Europe currently compare? Through the European Chips Act, the EU aims to increase its share of the global semiconductor market and, above all, improve supply security. Tens of billions of euros have been allocated for this purpose.
The Dutch company ASML holds a monopoly on EUV lithography machines, which are essential for producing the most advanced chips. In Leuven, Imec has recently received an EUV lithography machine built by ASML, intended for the production of chips expected to reach the market within the next decade.
Using this machine, Imec is developing a production line that not only enables the manufacture of 2-nanometre chips but also allows companies to test their latest designs. Imec collaborates with companies such as TSMC, Nvidia, Samsung Electronics, Google, and Apple.
In addition, Imec plays a key role in research into new chip architectures.
Where does Europe fall short?
Although Imec supports companies in chip development, the most advanced manufacturing technology remains with TSMC. Despite expanding into Germany, its 2-nanometre production will not be located in Europe. This is because the new facility will focus on so-called “mature nodes”, older chip technologies that are essential for the automotive and industrial sectors. While this strategy protects the current economy, it contributes little to the rapid development of advanced AI chips.
The chip race
Although the Terafab facility has yet to be built, Musk aims to begin mass production of chips by 2026. Meanwhile, Samsung Electronics, in collaboration with Imec, plans to produce its second generation of 2-nanometre chips by the end of 2026.
Musk may no longer be the first to bring 2-nanometre chips to market. However, he could take the lead in terms of the speed and scale at which such chips are produced.