# Terafab is meant to secure future chip supply

Markdown copy of https://realalpha.app/s/terafab-is-meant-to-secure-future-chip-supply/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Elon Musk](https://realalpha.app/builders/elon-musk/) · CEO, SpaceX & Tesla; founder, xAI
- Host: [Chamath Palihapitiya](https://realalpha.app/people/chamath-palihapitiya/) · Founder & CEO, Social Capital · Led Facebook's growth team; his firm backed Slack and AI chipmaker Groq.
- Host: [Jason Calacanis](https://realalpha.app/people/jason-calacanis/) · Founder & CEO, LAUNCH · Early Uber angel; sold Weblogs Inc. to AOL; hosts This Week in Startups.
- Host: [David Sacks](https://realalpha.app/people/david-sacks/) · Co-founder & partner, Craft Ventures · PayPal's first COO, founded Yammer; White House AI & crypto czar 2025–26.
- Host: [David Friedberg](https://realalpha.app/people/david-friedberg/) · CEO, Ohalo · Founded The Climate Corporation, sold to Monsanto for about $1.1B in 2013.
- Show: All-In
- Episode: [Elon Musk & Gwynne Shotwell on AI Risks and Peer Review, Starship, Terafab, SpaceX/Tesla Merger](https://realalpha.app/v/iwBOQeFPAwg/), Sep 15, 2026
- Moment: 46:03 to 51:06 of the episode (5 min), playing on https://realalpha.app/s/terafab-is-meant-to-secure-future-chip-supply/; the episode from there: https://realalpha.app/v/iwBOQeFPAwg/?t=2763

## Quote

> “So it's either build TerraFab or **fail to scale**.”
> — [Elon Musk](https://realalpha.app/builders/elon-musk/) at [48:10](https://realalpha.app/v/iwBOQeFPAwg/?t=2890) · All-In

## Takeaways

1. Taiwan supply risks are one reason to build Terafab.
2. AI and edge computing could outgrow current fab capacity.
3. The Austin R&D line is the first step toward scale.

## About this segment

Elon Musk says Terafab would address Taiwan supply risks and the limits of existing fabs as AI demand grows. The project will start with an R&D line in Austin and scale in stages.

From “Elon Musk & Gwynne Shotwell on AI Risks and Peer Review, Starship, Terafab, SpaceX/Tesla Merger”, Sep 15, 2026. [Watch the full episode](https://realalpha.app/v/iwBOQeFPAwg/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[46:16](https://realalpha.app/v/iwBOQeFPAwg/?t=2776) Can we just hear a little bit? I'd love to hear the origin story of TerraFab from you guys. how did the concept what was the demand that that that made you say we've got to do this we've got to build this and not rely on the exact thing in a dream what's that fever came to me in a dream yeah you had covid it's like that it's like that movie explorer you know that mean came to me in a dream um but why do you think you should do this you know it's it i guess it sort of did come to minute room um well we're a little worried that maybe at some point um chips from taiwan would would not be available for who knows what reason um but any number of reasons for some reason at some point chips may not continue coming here from taiwan okay and um and that would really make things difficult if we didn't have any chips.

[47:22](https://realalpha.app/v/iwBOQeFPAwg/?t=2842) So that's an important reason to have TerraFab. Then long term there's just a scaling challenge where if you want to really scale AI both at the service within server centers as well as for edge compute for humanoid robotics and cars, you kind of run out of capacity with the existing Fabs. So, as it is, all the fabs are running at max capacity, so I think we need to make sure, there needs to be certainty of future supply of chips.

[48:02](https://realalpha.app/v/iwBOQeFPAwg/?t=2882) things become challenging geopolitically. And then even if they weren't challenging geopolitically, there's a scaling challenge with, it's quite difficult to scale chip production. And you really need the logic, the memory, packaging, the whole works in order to continue scaling. So it's either build TerraFab or fail to scale. Right. Those are the two options. And how... Sorry, go ahead. How deep have you guys gone on the line?

[48:33](https://realalpha.app/v/iwBOQeFPAwg/?t=2913) What's an urgency due to uncertainty on the geopolitical front? And how deep have you guys gone in designing the facility? Is this fully scoped? Is it sort of an outline at this point? To what degree do you have an actual project plan on dates and deliverables and what's going to be up and running when? We've got an R&D line that we're building first, so I think it's kind of crawl, walk, run. Yeah.

[49:02](https://realalpha.app/v/iwBOQeFPAwg/?t=2942) so there's an r d fab that we're building in austin uh that's a collaboration between tesla and SpaceX um it's at the austin giga texas campus so that's um and and that that's it's like a pretty big r d fab um so we have all the equipment on order for that and we probably will be able to i think we're probably able to make something useful by the end of next year not not at scale but as gwen said coral walk run we got to try to you know at least figure out how these machines work you know like we don't know how they work we don't have a voltage up line before i saw that you guys are unbelievable you had some job openings for lithography people and stuff and you know obviously all roads currently go through asml but you probably would want to diversify and or vertically integrate i think that you you've shown a lot of capacity to do that um so is that

[49:55](https://realalpha.app/v/iwBOQeFPAwg/?t=2995) part of the play as well elon like you're just going to have to make sure that there's vendor diversity so that if for whatever reason the weather conditions in taiwan are best that yeah um yeah there's it really is crawl walk wrong so the first step is can we make anything like try to figure out if we can make anything there's a crawl part and and then now try to make useful chips at scale would be kind of the walk part and then run would be like like now let's make them at massive scale so it's hard to say how long it'll take us to do these things but i think we'll get at least to the crawl part by the end of next year we're already doing packaging packaging is really important by the way because if you look at it the packaging capacity is like non-existent so even if you spin something you're kind of just waiting around 10 cupping so that's a very good

[50:50](https://realalpha.app/v/iwBOQeFPAwg/?t=3050) place it started yep i need to ask a tesla question because we saw on 1001 it looked like