Elon Musk, who leads both companies, said the facility would supply chips for Tesla vehicles and SpaceX satellites.

Elon Musk said Tesla and SpaceX will team up to build a massive new chip factory in Austin, Texas, to support his far-reaching plans for artificial intelligence, robots and human settlements in space.

Musk said Saturday that the Terafab facility is expected to make chips Tesla would use in its vehicles and in the Optimus humanoid robots the company is increasingly focusing on. It will also make chips optimized for use in space, where SpaceX is planning to deploy massive numbers of satellites capable of handling AI computing tasks.

"We either build the Terafab or we don't have the chips," he said while on stage at an event in Austin. "We need the chips, so we're going to build the Terafab."

Musk has discussed elements of the plan before, including with Tesla investors during the company's quarterly update in January. SpaceX's involvement, and some of the details about the scope of the facility, weren't previously known.

The executive didn't discuss timelines for the project. How the project will be structured between Tesla and SpaceX, which recently merged with Musk's xAI startup, wasn't immediately clear.

Companies including Tesla often design their own semiconductors, but then need a supplier to actually make them in a so-called chip fab.

Last July, for example, Tesla and Samsung Electronics signed a nearly $17 billion deal that called for the Korea-based company to produce advanced chips for Tesla that could be used in robots, self-driving cars and AI data centers.

Certain chip types, like so-called memory semiconductors, are caught in a supply crunch, given the voracious demand for them from companies competing to develop AI.

Taking on a chip fab, as semiconductor manufacturing sites are called, would be a big undertaking for Tesla and SpaceX. The facilities are expensive to build and can take years to fully develop.

"Even understanding Elon Musk's history of doing difficult things, this seems like a Herculean task," analysts from Morgan Stanley said in a recent note about Tesla developing a chip fab. Such a project, the analysts said, would cost well over $20 billion over multiple years.

On Saturday, Musk described himself as grateful for the work Samsung, Taiwan Semiconductor Manufacturing and others have carried out, saying he wants those contractors to expand as quickly as they can. But those companies aren't planning to increase production as quickly as his companies would like, sparking the need for the new Terafab development, he said.

The Terafab facility will be stocked with equipment necessary to handle the intricate lithography needed for semiconductor manufacturing, as well as chip design, testing and production, according to Musk. The goal is to create a feedback loop within the site to allow for quick improvements, he added.

In a social-media post Sunday, Musk said Terafab will feature two semiconductor fabrication operations, with each specializing in a specific chip design

"A super high production rate allows us to test very quickly what steps can be deleted, simplified or sped up," he said on X.