Jensen Huang resigned as Nvidia CEO two weeks after his relationship with a suspected Chinese spy was revealed by intelligence sources and a day after his affair with an Nvidia vice president became publicly known. But hours before this move, when it was just rumored that the Nvidia board was planning to oust him, Elon Musk had already stated his willingness to hire the former Nvidia chief on X. A random X user posted, “Elon please hire Jensen,” to which the billionaire replied, “That would be an honor.”

Despite the scandals that Jensen is currently facing, he still has the engineering know-how, deep knowledge of the industry and its inner workings, plus multiple connections across the world, which would be extremely valuable for any company looking to break into the semiconductor industry.

This is exactly what Elon Musk is doing with his Terafab project, which he first mentioned in November 2025. Jensen Huang even warned that this was going to be a challenge, pointing out that “the engineering, the science, and the artistry of doing what TSMC does for a living is extremely hard.” Nevertheless, Musk poured his resources into the project, with construction on the Terafab facility in full swing and with plans to hit volume chip production by the second half of 2028. Musk himself said that the site targets a production capacity of a million wafers a month by 2032. Tesla has an ambitious AI accelerator roadmap, and SpaceX has even touted making its own GPUs in the future.

We still don’t know what Jensen Huang’s plans are, but even though he’s no longer a part of the Nvidia board and its leadership, Jensen and his wife, Lori, still jointly own approximately 800 million Nvidia shares through various trusts and LLCs, while Huang himself personally owns around 70 million Nvidia shares.

Aside from that, he still has an outstanding invitation from Congress to discuss Nvidia’s security protocols, which could turn into a subpoena if he snubs them, although we don’t know how his resignation would affect the closed-door meeting. There’s also a reported FBI investigation into his relationship with Alice Huang, the Megaspeed executive who was allegedly instrumental in the import of $7.5 billion worth of Nvidia AI GPUs into China and is suspected of working with China’s Ministry of State Security.

Jensen Huang is just the latest in the long list of executives who resigned or were ousted from their leadership position because of a relationship or an affair with a subordinate. This includes former Boeing CEO Harry Stonecipher in 2005, HP CEO Mark Hurd in 2010, Intel CEO Brian Krzanich in 2018, and former McDonald’s CEO Steve Easterbrook in 2019. Musk himself is known to have had relationships with subordinates from his various companies, and that he has even fathered four children with Shivon Zilis, a top executive at Neuralink who started working at Tesla in 2017, through IVF.

It’s still not confirmed if Musk’s reply is a serious offer for Jensen Huang. But if the former Nvidia chief ever decides to work for Musk on his Terafab project, then Jensen could put his effort and expertise into turning it into a formidable competitor to Nvidia.

Starbase, Texas, which hosts SpaceX’s Starship rocket program, has just posted a notice of a public hearing for a gas-fired power plant and supercomputing facility within the corporate limits of the city. The project has an initial cost of $24 billion and will apparently be owned by SpaceX. Bloomberg reports that the project could face resistance from incoming Texas governor Gina Hinojosa, who campaigned against approving new data centers until the state's legislature has enacted stronger protections against potential harms from those projects.

Until now, Elon Musk's SpaceXSI has been building out its Colossus I and Colossus II data centers near the Mississippi-Tennessee border, but those projects have faced backlash, attracting a lawsuit from area residents that aims to curb the pollutants produced by the large number of gas turbines required to power those facilities.

Now, it seems that SpaceXSI wants to build another site in Texas that would lie in a city that mostly sits on land owned by SpaceX and whose population mostly comprises its own employees. The project might face reduced local opposition compared to the company's Memphis facilities, as Starbase is essentially a company town for SpaceX. But Hinojosa's arrival in the governor's office could trump that seemingly permissible local regulatory climate.

The project would seem to be a part of SpaceX’s push to build 10 gigawatts of compute in 2027 alone, and the $24 billion budget for this new facility could make it one of the biggest and most expensive data center projects focused on a single site. The company's announcement also notes that the $24 billion outlay it foresees was only for the “initial phases of the projects” and that it could “include future expansions.” That suggests that SpaceXSI could invest in more capacity in Starbase, Texas, going forward, assuming the favorable regulatory climate the company likely hoped for in the area holds.

Beyond its new terrestrial ambitions in Starbase, SpaceX also remains hard at work on launching data centers into space. Musk has already laid out the plans for a first-generation AI1 compute satellite with a 150kW peak compute payload, and submitted a proposal to build a 1-million-satellite Orbital Data Center System to the FCC. That work could accelerate after data center measures lost big in the poll in the recent U.S. midterm elections. In a post-election post on X, Musk ventured that “data centers in space looking pretty appealing right now.”

Elon Musk’s Terafab, a joint venture of Tesla and SpaceX, has informally told equipment makers it is seeking to produce 1 million wafers per month after 2032, according to Financial News. About 70% of this output, or 700,000 wafers, is planned to go to memory, with more than 300,000 going to logic chips. Terafab’s procurement team has already visited Japan to ask some local toolmakers for delivery within months. The memory allotment would rival Samsung’s estimated DRAM production capacity if it were all of that type.

Samsung’s DRAM capacity was estimated last year at 650,000–700,000 wafers a month, while SK hynix is reportedly at about 550,000, with about 1 million a goal by 2030. The comparison has to be taken in context, as Terafab’s 700,000 measures all of its expected memory output, which could be NAND or DRAM, while the Samsung and SK hynix figures measure only DRAM. As it is, the memory portion alone would be 3.5 times the reported 200,000 at SK hynix’s Wuxi fab in China.

Many in the industry were skeptical when Musk announced the plans in March, but orders are now leading more companies to see a real business opportunity. The timeline is aggressive, as it usually takes three years or more to get from planning to volume at a leading-edge fab, and Terafab is targeting volume production in the second half of 2028. Procurement officials from the company reportedly visited Japan earlier this month to meet local suppliers and to work on details on bringing in equipment, with some suppliers asked to deliver within a few months.

The Elec also reports that Terafab representatives visited booths of about 10 Korean materials, parts, and equipment firms at SEMICON West, with some NDAs signed.

Logic chips are one thing — Jiji Press reports Terafab is working with Intel to adopt its 2nm and 1.4nm processes — but memory is another, and it’s not clear what type of memory is on the docket. Technical help from a Taiwanese company is under consideration for memory, but no partner has been named, leaving 70% of the planned wafers without a disclosed process technology.

Memory production tends to split between DRAM and NAND flash, the latter for non-volatile storage. A Tesla job listing for a Terafab Memory Process Integration Engineer, reported in August, covers end-to-end DRAM process integration and DRAM node development, and supports emerging memories such as MRAM, RRAM, and 3D DRAM. Terafab hasn’t said how its DRAM would be divided among products like HBM and LPDDR, both useful for AI and both mentioned in its job postings, or whether it expects to make and stack the DRAM itself or package chips it brings in.

Building a cutting-edge logic fab on U.S. soil is its own challenge, and Tesla and SpaceX lack chip-manufacturing experience. Even Musk, on a SpaceX call last month, called Terafab’s dates “very aggressive” and said he put “big error bars” on the timeline. The first SRAM test chip is targeted for around May or June 2027 at the Austin research facility.

How TSMC might fit in remains open. TSMC says any fab with its involvement has to be run by TSMC, while Musk said his own companies would build and operate Terafab, a scenario which could leave TSMC as a space tenant. At least the spending plans are known: $16.8 billion for the first phase in Grimes County, Texas, with total investment of up to $119 billion if later phases proceed. A pilot plant could be completed as early as July 2027.

A scant two weeks ago, Elon Musk made yet another bold claim: he was "highly confident" that SpaceX could build 10 GW of data center capacity in 2027 alone. The grandiose statement raised a few eyebrows, but in a detailed write-up, the analysts at Semiaccurate explain how that's actually doable... if the stars align. That +10 GW figure over the existing 3 GW would mean the company had built in as much data center capacity in 1.5 years as Google did in its entire existence, according to the post. The site notes that should this forecast ring true, that would make SpaceX the fastest-building hyperscaler on the planet, far outpacing every other player.

As proof of progress, the analysts point to how quickly the Colossus 1 and Colossus 2 buildouts are progressing, estimated from aerial shots and available information. They note that Colossus 2's power generation capacity went from only 0.4 GW in January to a projected 2.4 GW by the time the year is out, at the rate that the relevant hardware is popping up. The site tallies up 9 GW of potential data center capacity across the sites it's tracking, including Colossus and Starbase facilities.

Notably, the facility includes 89 turbines capable of delivering approximately 2.5 GW, helped along by a total of 1377 Tesla battery Megapacks, all already on the campus. Due to emissions regulations, the facility will only eventually be allowed to operate roughly 1.24 GW of its own turbines.

Even with the 1.2 GW eventually coming in from the grid, there's a 300 MW shortfall to be filled by the batteries, which Semianalysis expects will top up with compute load variation and possibly external power. SpaceX has an agreement with the state of Mississippi that lets it temporarily operate the extra turbines, with a promised phase-out by July 2027.

As of September 25, Elon Musk had stated that Colossus 2 already had 550,000 GPUs working, presumably in the extant Macrohard and Macroharder facility. At the time, SpaceX was reportedly gunning to have its Gun Range and Project SPAM centers ready in short order. Judging by the photos, they appear to be progressing at a rapid pace, as there are visible facilities where there was nothing but loose dirt a few months ago — though nothing says the racks of GPUs are in there yet.

Semianalysis' team remarks that SpaceX's builds have become so fast that they kick off well before it decides how the facility will be powered, and the respective power supplies come in. We've all seen the news about the scarcity of GPUs and RAM, but for a data center, just having enough power is problem enough.

If SpaceX can keep its stream of gas turbines coming along, that's quite the achievement by itself. The analysts think that Tesla may be manufacturing mechanical and electrical equipment in modules, presumably ready to install directly from the factory, or even trucks. Heck, the aforementioned temporary turbines are mounted on truck flatbeds as "mobile" power generation, seemingly in a bid to skirt regulations.

In the hyperscaler world, speed is the name of the game, particularly in these trying times when there are mounting suspicions that not all players will even make it to the finish line. Compute capacity being built and eventually becoming available is enticing for AI players, yes, but they're willing to pay through the nose for anything they can get their hands on right now, as current demand far outstrips supply.

Having facilities built doesn't mean that they're actually working, however, or that they're functioning at their expected rate. Zoning, permits, grid connections, power generation constraints, water supply, and public opposition are some of the few problems that have plagued builds most everywhere, none of which relate to the existence and installation of computing hardware.

Microsoft's Satya Nadella put it clearly: "You may actually have a bunch of chips sitting in inventory that I can’t plug in. In fact, that is my problem today." That's far from the only report that a significant percentage of AI accelerators are still stuck in warehouses, on hold until they can go fulfill their duties in a server rack somewhere.

Since building a datacenter involves many moving parts, even assuming that Colossus 2 wraps up as quickly as it appears to be, that doesn't necessarily mean that SpaceX will be able to replicate its success across its other sites. There is no luck involved in engineering, yes, but some factors like availability of hardware and materials, changes in legal winds, and public opposition are hard to predict, even for someone with resources as extensive as Elon Musk.

And yet, the folks at Semianalysis note that two data centers at Starbase are undergoing rapid construction, suggesting that SpaceX can indeed replicate Colossus' success. They attribute the speed to SpaceX having most of the infrastructure and power generation hardware effectively in-house, via Tesla's manufacturing ability. If that assessment holds, the firm could be bypassing supplier lead times that other hyperscalers have to contend with.

Even if SpaceX doesn't reach its "10 GW in a year" target, if the Colossus buildouts are anything to go by, the company may well be moving faster than anyone else in this space. Metrics aside, in the AI gold rush, coming first is all that's needed to win.

SpaceXSI, Elon Musk’s data center business powering Grok, is reportedly buying 418 properties in Colonial Hills, Southaven, which sits about half a mile from the powerplant that the company will use to power its data centers in the area. According to The Guardian, real estate agents have been going door to door, offering owners deals on behalf of the company provided that they do not join a class-action lawsuit over the noise pollution coming from the gas turbines that power its GPUs.

MZX, the SpaceXSI subsidiary that operates the Colossus II site, circulated an open letter to nearby residents, saying that it “requires property for its business purposes,” with Southaven mayor Darren Musselwhite saying that they will be used to house SpaceXSI staff that the company will need as it expands operations. Musk himself is reportedly staying in the area in an Airstream trailer four nights per week to personally oversee the data center build-out needed to power Grok AI.

The bigger issue here, though, is the requirement that sellers must sign an agreement that prevents them from joining the ongoing case against the company for noise pollution. The Colossus 1 and 2 sites have been in hot water since they started operating, primarily for their use of unpermitted turbines and the air pollution that they bring. SpaceXSI has since promised that it will remove all its unpermitted turbines in a year, especially as its 1.2-gigawatt powerplant comes online. However, this apparently hasn’t resolved the noise pollution issue that the community has been complaining about.

“It sounds like an airplane engine but it’s continuous, it’s incredibly loud. I’ve been woken up at 2am by it, I’ve been woken up at 3am by it. I sometimes have to just get away from it because it makes me so angry,” piano teacher Elizabeth Rose, who lives a couple of miles from the site, told the publication. One of the plaintiffs in the class-action, Jason Haley, also said to The Guardian, “There’s a high-pitched hum and then another sound like an airplane over your house. It’s been so torturous I can’t sleep; I just leave the house or turn on some music until I fall asleep completely exhausted. It drives you insane. You also lose hope because you’re being ignored or dismissed. There’s no escape.”

The company has denied all the allegations against it, saying that it has adjusted its power output and installed sound-dampening walls to reduce the impact on the neighborhood. Musselwhite also said that city monitors have not detected the site breaching the local ordinance limit of 70 decibels, although some experts say that persistent noise as low as 50 decibels could have adverse health impacts.

Opposition against the noise pollution and Musk’s purchases aren’t unanimous, though. Some residents aren’t as affected by the noise pollution, while local businesses are experiencing increased activity. Other people have also agreed to sell just so they could get away from the noise. The mayor says that the buyout isn’t intended to turn Colonial Hills into a company town. “The buyout has multiple purposes which are to provide homes for some employees and a goodwill gesture from a good corporate citizen for those who perceive the industrial development near them as negative,” Musselwhite said.

Elon Musk has confirmed that SpaceX closed $40 billion in debt financing for graphics processing units (GPUs), with the chips expected to arrive in the first half of 2027. He disclosed the deal on X, October 25 (embedded below) while responding to investor Chamath Palihapitiya, who had warned that mounting financing pressures and delays in data center construction could leave AI computing capacity sitting idle next year.

Musk agreed with that assessment, but argued that SpaceX is better positioned than many of its competitors because it can borrow against revenue from businesses outside AI. “Pretty much,” Musk replied to Palihapitiya on X explaining that debt markets had largely shut off funding for companies without substantial revenue independent of AI data centers.

He further said SpaceX had closed $40 billion in debt for GPUs because it has investment-grade status and revenue from its Starlink satellite internet and space businesses. “That means the 200+ neoclouds are going to see guppy-level death and consolidation. Some will make it through, but not many,” Musk wrote.

It is still, however, unclear what Musk meant by “closed” or whether investors had agreed to the final debt pricing. The disclosure comes as SpaceX prepares for another enormous spending period. CFO Bret Johnsen had stated during SpaceX’s Q3 2026 earnings call that the company expects capital expenditure of $35 billion to $40 billion in Q4 “because of the additional capacity coming online this quarter.”

Musk also clarified that the borrowing was primarily callable debt for GPU purchases expected to arrive in the first and second quarters of 2027. “This is primarily callable debt for GPU purchases that will arrive in Q1 and Q2. Not a major factor this quarter,” Musk wrote.

Earlier this month, it emerged SpaceX had proposed a $40 billion debt package for Nvidia hardware, estimating that the proposed funding could cover roughly 360,000 Rubin GPUs across 5,000 Nvidia NVL72 racks. The proposed package reportedly included $10 billion in bank loans and $30 billion in investment-grade debt. Musk has now said the financing has closed, but has not confirmed the specific GPU models or quantities covered by the deal.

The spending fits into Musk’s broader push to expand AI computing capacity. In August, xAI outlined plans to increase its data center capacity sevenfold by 2027, targeting 10 gigawatts. In September, the publication also reported that SpaceXAI planned to add another 660,000 Nvidia GPUs during 2026, potentially bringing its total to around 1.44 million if the planned deployments proceed.

And GPUs are only part of the bill. Data centers need power, cooling, networking equipment, and physical infrastructure before those accelerators can do useful work, which underscores SpaceX’s latest move.

SpaceX, meanwhile, has begun selling access to its own infrastructure. In May, Anthropic secured access to SpaceX’s Colossus 1 supercomputer, which includes more than 220,000 Nvidia GPUs and over 300 megawatts of computing capacity. Later in June, SpaceX struck a separate deal with Google, which agreed to pay $920 million per month for access to approximately 110,000 Nvidia GPUs and related hardware, with payments scheduled to run from October 2026 through June 2029.

Elon Musk says ASML and other critical semiconductor equipment suppliers have expedited shipments for the ambitious Terafab semiconductor manufacturing facility, supporting his aggressive timeline for the joint megaproject between Tesla and SpaceX. He made the announcement during a live broadcast of SpaceX's Q3 2026 earnings call on X yesterday, October 20. Musk also said the company is targeting volume chip production at the project's primary facility in Gibbons Creek, Texas, by the third or fourth quarter of 2028, emphasizing that the timeline is highly aspirational and carries "big error bars."

"These are very aggressive dates, and we're very appreciative of ASML and all of our other suppliers in accelerating equipment deliveries in order to achieve this outcome," said Musk, CEO of both companies behind Terafab. SpaceX plans to manufacture its first experimental test chip at its research fabrication facility in Austin, Texas, around Q2 2027.

Aside from Terafab, Musk also outlined near-term ambitions for his AI companies during the broadcast, saying he expects them to have 2.5 to 3 gigawatts (GW) of computing capacity active by the end of 2026. He also stated he is highly confident about bringing an incremental 10 GW online in 2027, saying he "would be surprised" if they do not hit a total of 13 GW of AI compute by the end of 2027.

Meanwhile, the next-largest project by planned capacity, the now-restructured 10 GW Project Stargate, was expected to reach full capacity in the 2030s. Meta's 5 GW Hyperion also has a similar timeline. To achieve the 13 GW milestone, Musk revealed that SpaceX and xAI are aggressively procuring upcoming next-generation NVIDIA architecture. He announced plans to get a massive 440,000-GPU Nvidia "Vera Rubin" training cluster online by the end of Q2 2027.

Shifting back to Terafab, Musk also boasted that once fully scaled and operational, the sheer commercial value of Terafab's advanced chip output will place it within the top 20 global country GDPs from a single physical building. For context, the 20th country on the list is Switzerland, with a GDP of around $1.14 trillion. The facility is a planned multi-billion-dollar, vertically integrated chip factory in Texas, with an ambitious goal of manufacturing 1 terawatt (TW) of AI computing power per year. Terafab will fabricate logic, memory, and advanced packaging internal architectures in one place. The project's massive planned output has mandated various collaborations across the semiconductor supply chain. Terafab will utilize traditional extreme ultraviolet (EUV) lithography systems utilizing Intel's 14A manufacturing node technology.

Intel officially joined the Terafab venture in April 2026 to help co-develop and refactor silicon fabrication technology, providing access to its state-of-the-art 14A manufacturing process. ASML, the world's sole commercial supplier of the $400 million EUV lithography systems required for high-volume, leading-edge chip production, is perhaps the project's most critical partner. Terafab's first EUV tool was reportedly slated for delivery in mid-2027, according to unofficial sources. It remains unclear if this is the expedited timeline Musk referred to in the broadcast.

Other major suppliers include American equipment manufacturers Applied Materials, Lam Research, and KLA Corporation, as well as Japan's Tokyo Electron. These companies will provide front-end processing, metrology, and process control machinery. Tesla and SpaceX are also in talks with about 10 South Korean equipment makers, including Hanmi Semiconductor, known for advanced packaging equipment, and HPSP, a high-pressure hydrogen annealing equipment manufacturer, as well as firms providing specialized piping components and process valves.

Musk's announcement says that several of these suppliers are expediting supply to Terafab, even as capacity remains tight across the semiconductor supply chain. The facility, which aims to mitigate future shortfalls of cutting-edge AI processors from external foundries like TSMC, will supply the chips for Musk's xAI clusters, self-driving vehicles, Optimus humanoid robots, and SpaceX's orbital AI data center, as well as the broader AI industry.

However, many experts have questioned the validity of Musk's 1 TW Terafab ambition. For context, research firm Gartner estimates the total global AI-optimized data center capacity is roughly 44 GW as of late 2026, 4.4% of Terafab's planned output. Although global AI computing capacity has grown by roughly 3.3x to 3.4x per year since 2022, according to EpochAI.

C.C. Wei, chief executive and chairman of TSMC, confirmed on Thursday that the company is considering expansion of its American production capacity beyond Arizona and Texas is one of the options it is evaluating. The head of the world's largest contract chipmaker also confirmed negotiations with Elon Musk regarding usage of Terafab, but stressed that to be a part of it, the fab must be managed by TSMC, which automatically excludes burgers and cigars in the cleanroom.

"We expanded our capacity consideration to see outside Arizona, whether we can get another chance to expand our capacity," said C.C. Wei during the company's earnings call with financial analysts and investors. "Texas is one [of our options]. We sent the teams to Texas to do all the evaluation.  We also talked to one of our customers, who is trying to build a fab, Terafab, let me be more specific."

Recently in transpired that Elon Musk's Terafab was in talks with TSMC over using the giant semiconductor production facility together. Elon Musk confirmed the negotiations, whereas TSMC did not comment.

"We are discussing with them to see whether we can be utilizing that actual capacity also," Wei added. "So, we are still in discussion. If we have any solid conclusion, we will share with you."

The information about negotiations between Elon Musk's Terafab and TSMC immediately triggered chatter that the parties are set to adopt TSMC's typical business model it uses for ESMC and JASM facilities under which it operates fabs co-owned with other investors. However, Musk then said that Terafab's facility would be operated by Terafab and TSMC could only sub-lease part of its cleanroom. Now, C.C. Wei said that if TSMC joins the project, it will insist on operating the fab.

"We are still in discussion," Wei replied when asked whether TSMC is not becoming a part of the Terafab project. "Let me say that. […] Either way, it will be possible, but the fab has to be run by TSMC."

The key question now is whether Musk and TSMC can agree on an arrangement that satisfies both parties. Musk wants Terafab to retain control of its manufacturing complex, whereas TSMC insists on operating any fab it uses. One potential compromise would be for Terafab to own the facility and lease a portion of it to TSMC, which would independently operate its production lines. Such an arrangement would allow Musk to retain ownership of the whole complex while giving TSMC control over select manufacturing lines. However, if Terafab itself uses Intel's 14A process technology at the facility, TSMC's presence there will be extremely complicated, if possible at all. In any case, so far the parties have not come to any agreement.

TSMC on Thursday reported revenue of $46.72 billion for the third quarter of 2026, up 41.2% year-over-year and 16.2% sequentially. The foundry's net income reached approximately $23.9 billion, an increase of 68.7% from the same quarter a year earlier, driven by elevated demand for chips used by AI infrastructure. The company's gross margin was 66.4%, which is below gross margins reported by DRAM makers, but still a historic record.

For the fourth quarter of 2026, TSMC expects revenue between $52.3 billion and $54.3 billion, which represents approximately 14% sequential growth at the midpoint. The company projects gross margin between 65% and 67%, up both sequentially and YoY.

SpaceX is reportedly looking to raise $40 billion to acquire Nvidia AI processors in a bid to expand its compute capabilities, reports the Financial Times. The financing could combine $10 billion in bank loans with $30 billion in investment-grade debt and may be completed in 2027, though discussions are still at an early stage and there is no guarantee that a transaction will materialize. If it does, then SpaceX's xAI will get $40 billion worth of Nvidia Rubin generation hardware, which includes AI accelerators.

Although Bloomberg reports that the proposed financing would be used specifically to purchase Nvidia AI accelerators, since xAI has traditionally bought servers or rack-scale AI solutions from Nvidia and its partners, it is likely that the company will continue to do so rather than opt to get accelerators and then build AI servers itself. Assuming that xAI indeed gets Vera Rubin NVL72 systems at around $8 million per unit, then for $40 billion it is going to get approximately 5,000 or so machines with roughly 360,000 Nvidia Rubin AI accelerators inside. At this point, it is unclear whether $40 billion is xAI's entire new compute capacity budget for 2027, or if the company plans to spend more.

The scale of xAI's Nvidia deployments is already substantial. Elon Musk said last month that xAI's Colossus 2 cluster currently houses 110,000 Nvidia GB200 accelerators and 440,000 GB300 devices.

SpaceX intends to obtain approximately $10 billion from banks and raise another $30 billion on the investment-grade debt market. Apollo Global Management is expected to take the leading role in arranging the financing, while bond manager Pimco is among a limited number of lenders discussing participation, the report claims. The transaction is currently expected to close sometime in 2027.

Apollo already has considerable exposure to this market and has already participated in financing the buildout of Elon Musk's AI infrastructure. In August, Nvidia teamed up with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR to establish financing platforms designed to attract more than $500 billion in third-party funding for AI infrastructure. Bloomberg reports that Apollo had previously arranged a $7 billion financing deal with Musk's xAI that financed Nvidia hardware intended for the company's Colossus 2 data center near Memphis.

No parties mentioned in the story commented on the potential deal.

Intel will remain a part of Elon Musk's Terafab project, Lip-Bu Tan, chief executive of Intel, told reporters on Wednesday. Around the same time, Elon Musk, chief executive of SpaceX, Tesla, and xAI, said that Terafab remains committed to building and operating its fab itself, but proposed to lease a part of the fab to TSMC.

Intel will continue its involvement in Terafab, Lip-Bu Tan told Bloomberg prior to the company's event in Japan that commemorates the company's presence in Japan. Back in April, Intel and Terafab, the semiconductor production venture by SpaceX, Tesla, and xAI, announced that the new chipmaker would use Intel's next-generation 14A fabrication process to make chips. Details of the collaboration are still unknown, but there is a general understanding that Intel will license its manufacturing technology to Terafab, though it is unclear whether it will also help ramp up production using the node.

At around the same time, Elon Musk debunked rumors that his companies would invest in Terafab and then partner with TSMC, which will build and operate the fab. Instead, Elon Musk proposes that TSMC sublease a part of Terafab to make chips for its customers.

"No, we will build and run the fab," Elon Musk wrote in an X post. "Let there be ZERO doubt about that. Maybe TSMC subleases part of the Terafab if they want, but nothing more than that."

Offering TSMC, the world's largest foundry that owns and operates dozens of advanced 300-mm fabs around the world, to 'sublease' a part of Terafab is quite an unusual arrangement for many reasons.

First up, TSMC has its own production facilities as well as aggressive plans for about 10 new fab phases in the coming years, and it hardly needs to sublease any capacity or part of the building or site from a third party.

Secondly, semiconductor fabs are not generic facilities: if Terafab is initially equipped and qualified around Intel's 14A process technology, converting part of the facility for TSMC's A14, A13, or A12 processes that the company will use in the back half of the decade would require different process flows, equipment configurations, materials, automation, qualification, and contamination control. Theoretically, TSMC could install a largely independent production line within the same enormous building, but at that point the arrangement would resemble TSMC building and operating its own fab inside a Musk-controlled site rather than simply renting spare manufacturing capacity.

Thirdly, if Intel licenses 14A technology to Terafab, the agreement would almost certainly contain extensive provisions governing access to Intel IP, process information, equipment configurations, and personnel. Putting TSMC engineers and manufacturing operations inside the same facility could create contractual and IP-isolation issues even if TSMC never directly touches the Intel production line. In fact, IP protection would be extraordinary at Terafab, which will complicate its operation.

Fourthly, if indeed two chipmakers end up in the same fab building, or even in the same campus, responsibility for downtime becomes messy. In the case of a Terafab-owned power distribution system, water plant, chemical system, or cooling installation fails and takes someone's production offline, determining operational responsibility and financial liability for potentially hundreds of millions of dollars of affected wafers would be considerably more complicated than at a site controlled by one company.

Finally, if Terafab can equip enough cleanroom space by the end of the decade to satisfy semiconductor requirements of Tesla, SpaceX, and xAI while still leaving substantial capacity available to TSMC, that would raise questions about whether the project had significantly overbuilt capacity in its initial phases.

Since Musk's statements at X are deliberately vague, it is hard to interpret them. In fact, there might be a conceptual problem with Musk's statement. If TSMC installs its own tools, hires its own employees, brings process technology, and production management, while Terafab just provides land, shell, and infrastructure, calling this a 'sublease' undersells what would be a TSMC fab embedded within the Terafab campus. Alternatively, if Terafab provides the tools and infrastructure and TSMC just operates them, that starts to look much closer to precisely the kind of TSMC operational involvement Musk appears to be denying.

Anyhow, while Intel has confirmed its involvement in the project and Musk wants TSMC to be part of it as well, the latest comments raise more questions than they answer.

Elon Musk has confirmed that SpaceXAI will change its name to SpaceXSI, to reflect the new moniker “Super Intelligence” coined by President Trump as a replacement for “Artificial Intelligence.” In an X post on September 4, Musk wrote, “Yes, we will make that change,” in response to an X user’s question about renaming the AI company. Musk had earlier posted, “No more AI. SI. It’s better,” following up the post with a photo of the cover page of Nick Bostrom's book, “Superintelligence.”

President Donald Trump signed the executive order to officially rebrand “Artificial Intelligence” to “Super Intelligence” on September 29, 2026, during a high-level technology summit at the White House dubbed “Super Intelligence Luncheon.” The administration argued that “artificial” implies something fake and that “super intelligence” better captures the technology's true scale and potential. Several Federal agencies have already implemented the rebrand.

Six days after the summit, President Trump formally launched the “Super Intelligence Force” (SIF) through a presidential mandate and public announcement via Truth Social on Sunday, October 4, following up on his earlier promise to launch a force that will “cherish” the technology and “help it grow.” The Force will report directly to the White House and will oversee domestic AI policy, ensure American AI dominance over global rivals like China, and interface directly with the private tech sector.

Regarding the rebrand, it is unclear how the numerous American AI companies with “AI” in their names and products intend to proceed. Furthermore, the total number of registered .ai domains has officially surpassed 1 million globally. Registrations had reportedly generated an estimated $96.4 million for the 2026 budget of Antigua — a tiny Caribbean island nation with “.ai” as its country-code top-level domain — accounting for nearly half of total government revenue.

Following the announcement, speculators are frantically buying up .si domains, often registering look-alike domains mirroring existing .ai sites. Musk has yet to implement the “SI” nomenclature across his companies, with the X.ai domain still featuring “AI” and “Artificial Intelligence” in all copies sitewide, as of this report.

TSMC and Elon Musk's Terafab semiconductor production initiative are discussing a potential collaboration under which TSMC would build and operate a facility that will exclusively serve Elon Musk's Tesla, SpaceX, and xAI companies, according to Tim Culpan’s Culpium newsletter on Friday. Elon Musk confirmed the discussions early on Saturday, but did not elaborate.

"Just discussions, but something may come of it," Musk wrote in an X post, while TSMC has so far remained tight-lipped.

Under the arrangement Culpan considers most probable, TSMC would own and operate the new semiconductor production facility, while SpaceX/Terafab could invest in the venture, commit to buying a guaranteed volume of chips, or combine both approaches. However, the exact ownership structure remains under discussion. Another option would put SpaceX in control of the venture with the majority ownership; TSMC would invest less, but would still provide 'operational expertise' and process technologies. Perhaps, an interesting background detail from Culpium is that TSMC's rumored intentions to build a fab complex in Texas are tied to the foundry's effort to support Terafab.

The proposed 'Plan A' arrangement could resemble TSMC's JASM and ESMC joint ventures in Japan and Germany, where local partners provide capital and demand while TSMC contributes process technology and operates the fabs. The proposed 'Plan B' structure — under which SpaceX will hold the majority ownership of Terafab while TSMC would operate the facility and bring its own process technology — would be completely new for the world's No.1 contract chipmaker, though.

The development certainly raises questions about Intel's role in Terafab. For now, Intel is to supply its 1.4nm-class 14A process technology to Terafab, which would produce chips for Elon Musk's SpaceX, Tesla, and xAI. If TSMC becomes involved, then Intel's 14A could drop out of the game because TSMC will bring its own node.

Since nothing is official at this point, both 'Plan A' and 'Plan B' should be considered as speculations rather than the two options currently on the table, as there might be 'Plan C,' 'Plan D,' and even 'Plan E.'

TSMC is a leading advanced packaging supplier, so Musk's Terafab might be interested in making chips in Texas (presumably using Intel's 14A process technology) and then package them in Texas, which is where TSMC might come into play. Another thing to consider is that while Intel has a broad cross-patent license agreement with TSMC, Terafab does not, so producing chips using an Intel-developed node might infringe one of TSMC's patents, which might become a problem. To that end, Musk needs to keep TSMC close, perhaps to the point of buying into Terafab.

One thing to certainly keep in mind is that Elon Musk barely wants Terafab to become a foundry that competes against Intel Foundry, Samsung Foundry, or TSMC. What he needs is an uninterrupted and surplus supply of custom silicon to SpaceX, Tesla, and xAI to support their AI, automotive, and space vehicles. Given the rather broad strategic goal, Musk is probably very flexible when it comes to both tactics and strategy.

The end goal is finally in sight for Elon Musk, nearly two years after he announced plans to expand the Colossus supercomputer to over a million GPUs. The billionaire said on X that 220,000 Nvidia GB300 GPUs will be operational by next week, with another 220,000 coming online in November. He also added that another 220,000 units will come online by late December “if we get lucky.”

These numbers would add to the 110,000 GB200 and 440,000 GB300 GPUs already operating at Colossus 2, plus the 150,000 H100, 50,000 H200, and 30,000 GB200 GPUs at Colossus 1. This would bring SpaceXAI’s GB300 GPUs to 1.1 million units, with its total GPUs in operation to 1,440,000 units. This is quite an achievement, especially given that the company is behind its rivals by several years — SpaceXAI is only three years old, while Anthropic and OpenAI are six and ten years old, respectively. Interestingly, the Colossus 1 site, which features a combination of Hopper and Blackwell GPUs, is inefficient for training Grok, so Musk rented it out to Anthropic for inference instead. On the other hand, Colossus 2 solely uses Blackwell GPUs, ensuring that there won’t be any bottlenecks.

While Elon Musk essentially begged for Jensen Huang to give him these GPUs, getting his hands on them isn’t currently the hardest part. One of the biggest issues facing data center build-outs right now is power, and SpaceXAI solved this by bringing its own. This has resulted in some controversies with the surrounding neighborhood, ending in a lawsuit against the company for running unpermitted gas turbines. It has since promised to remove them, but only over a span of one year as its own 1.2-GW power plant comes online.

Running a million GPUs or more on a single site is an impressive achievement, but SpaceXAI isn’t the only one trying to reach this goal. Broadcom said in 2024 that it has three hyperscale customers gunning for this target by 2027 but didn’t mention who these customers were. As for Elon Musk, the 1-million-GPU target is just the beginning. He said that SpaceXAI will grow its data center capacity sevenfold by 2027, and he’s even aiming for 50 million H100-equivalent GPUs by 2030. These data centers won’t be limited to the ground as well, with SpaceX planning to launch an Orbital Data Center System with a million satellites, despite Jensen Huang saying that it’s a “dream” for now.

In an unexpected turn of events, Terafab has faced an odd roadblock as a small U.S.-based company called Tera-Print sent a cease-and-desist letter to SpaceX and Tesla back in May to stop using the Terafab name. The company with tera-scale ambitions has run into a tabletop-sized problem because the Tera-Fab name has already been used for about a decade by Tera-Print, according to PCMag.

As it turns out, Tera-Print sells tabletop-sized Tera-Fab-branded beam pen lithography (BPL) tools primarily aimed at bioengineering and prototyping of microfluidic devices and has used the brand for about a decade. The U.S. Department of Defense appears to be a client of Tera-print, which uses Tera-Fab.

While Tera-print claims that the Terafab name could be confused with its Tera-Fab product family, Tesla, SpaceX, and SpaceXAI counter that the operations are fundamentally different: Terafab is set to produce chips in extremely high volumes to serve AI, automotive, robotics, and eventually (at least some) space applications, whereas Tera-print's Tera-Fab is a compact lithography tool that can be used for bioengineering or prototyping of electronic or optical devices.

Formally, the trademark coverage puts both names into the same semiconductor technology bucket, albeit with different descriptions:

• Tesla's Terafab covers 'custom manufacture of semiconductor chips, memory chips, integrated circuits, and wafers' (IC 040) as well as 'distribution services, namely, delivery of semiconductor chips, chip carriers, namely, semiconductor chip housings, memory chips, integrated circuits, semiconductors, and microchips' (IC 039).
• Tera-print's Tera-Fab covers 'Polymer pen and beam pen lithography instruments in the nature of 3D micro-printers and 3D nano-scale printers' (IC 007); 'Polymer pen and beam pen lithography instruments in the nature of 2D micro-scale molecular and material printers and 2D nano-scale molecular and material printers' (IC 009), 'Light-directed photochemical synthesis tools; Industrial advanced materials synthesis tools; Advanced light projection systems; High precision force-feedback sample alignment modules; Environmental control sample chambers' (IC 009); as well as 'training services in the field of AI design and development, electronics, computer science, biology, and material science' (IC 042).

The two companies reportedly entered settlement talks, which included an offer from Tesla, but Tera-Print alleges that Tesla expressed interest in continuing negotiations instead of taking the dispute to court. Tera-Print says it will now defend its registered trademark and argues that the companies operate in related fields, which could lead to confusion.

Senators Bernie Sanders and Greg Cezar have announced their Ban Artificial Superintelligence Act. Seeking to pause advanced AI development, the legislation’s stick is pretty severe. Penalties facing entities/developers who violate the pauses and prohibitions in the bill could face up to 20 years in prison. That’s a sentence on a par with someone found guilty of designing a rogue nuclear weapon.

The news is suddenly filled with grave concerns about AI becoming too powerful. It could even threaten the future of humanity. Moreover, it might surprise casual observers that AI industry leaders like Sam Altman, Dario Amodei, and Elon Musk appear to agree. With this threat on the horizon, politicians are keen to introduce legislation to protect the citizens they serve.

According to USA Today, the Sanders bill “is the most extreme AI-related legislation to date.” It likely faces strong opposition in Congress, particularly among enterprise-supporting Democrats and Trump-aligned Republicans. However, with recent statements from industry leaders seemingly harmonizing with calls to slow down AI development and in favor of greater oversight/regulation, we could see politicians agree on something for a change.

Back to the Ban Artificial Superintelligence and Temporarily Pause Advanced AI Development bill and its specific wording, we note that it is advised that the government set up a new cabinet-level federal agency "to safeguard the public from the dangers of artificial intelligence, including by enforcing a prohibition on artificial superintelligence." As well as setting harsh penalties in the U.S., it is proposed that work be done to "ban superintelligence around the world" via international agreements, allied coordination, and so on.

Full speed ahead, or hit the brakes?

There remain plenty of interesting arguments on both sides of the AI progress divide. It is difficult to argue that the U.S. shouldn’t keep going as fast as it can, as a matter of national security, for example. On the other hand, the whole of humanity being wiped from the face of the Earth by opening Pandora’s AI box of tricks makes geopolitical concerns seem like minor grumbles.

We’ve seen some other theories about why the AI barons are suddenly in favor of regulation. Some critics say they may be running out of road, unable to balance private investments with credible paths to profitability. Thus, they now want to move away from a commercially funded model to a government-funded ‘Manhattan Project II,’ with their terrifyingly powerful AI being guarded by the state.

Amid growing community backlash, SpaceXAI offered a 50% discount to anyone living near its two data centers in Memphis, Tennessee, and claimed that thousands have already taken advantage of the promotion. Aside from the discounts offered to residents of the city and neighboring Southaven, Mississippi, SpaceXAI Memphis said in its X post that it’s also waiving the upfront hardware cost for the recently launched Starlink V5 rental kit across all plans, saving users up to $349 in one-time costs.

Critics say that Elon Musk is simply making this move to buy goodwill with his neighbors, especially as his data centers have been in hot water over the deployment of unpermitted turbines to deliver much-needed power. "Communities in Memphis and North Mississippi aren’t asking for discounted internet service,” SELC Senior Attorney Amanda Garcia told PCMag. “They're asking xAI to shut down its illegal, unpermitted power plant that continues to pump out staggering amounts of harmful (sic) pollution, including smog-forming nitrogen oxides, fine particulate matter, and hazardous chemicals like formaldehyde.” While SpaceXAI has since promised to remove all 69 of its unpermitted generators, it says it will do so only over a span of one year as its 1.2 GW power plant comes online to replace them.

Starlink residential plans are available in three tiers: 100 Mbps for $55 a month, 200 Mbps for $85 a month, and Max for $130 a month. Residents who subscribe to any of these plans could get them for just $27.50, $42.50, or $65, respectively, resulting in massive savings. This makes the cheapest Starlink plan more affordable than other internet service providers like AT&T and Xfinity, whose plans often start at $35 to $40 per month.

However, those competitors offer fiber-based connections with speeds up to 300 Mbps, meaning users would be getting a downgrade if they switch over. However, some users in the r/memphis subreddit commented that this is a great option for areas of Memphis and Southaven that still lack fiber access, and it could also be a useful backup for those who need reliable internet service. There were also several complaints about outrageous fees from other options, which drive their internet costs well above $40, making the $27.50 monthly fee for the 100 Mbps Starlink plan a tempting option. Interestingly, the company is also offering the same discount in Vermilion Parish, Louisiana, where SpaceX plans to build its new spaceport.

While the company’s social media post makes it seem like 2,000 is an achievement, it’s still a small number relative to the city's total population. The latest U.S. Census Bureau estimates that Memphis alone has a population of over 600,000 people and more than 250,000 households. That means the new subscribers account for less than 1% of the total homes in the city. Aside from that, SpaceXAI’s latest earnings report says that it has more than 12 million subscribers, so the 2,000 new subscribers from the city are just a drop in the company’s massive bucket of Starlink users.

Electricity supply in the U.S. is a limiting factor preventing AI data centers from coming online as quickly as possible. Because of this, many projects are turning to portable natural gas turbine generators to get the electricity they need and bypass long wait times to connect to the grid. This has driven demand for turbines, so Elon Musk said on X that SpaceX will bring turbine blade and vane casting in-house.

Musk was one of the first to deploy “portable” power generators to power a data center, allowing him to bring the Colossus data center in Memphis, Tennessee, online in record time. Note that these mobile generators aren’t small devices — they’re massive units about the size of one trailer and may also include another trailer or two of other necessary parts and accessories to run it (not including the tank needed for its fuel). OpenAI followed suit a few months later, announcing it will deploy turbines at the first Stargate data center to deliver additional power.

This sudden influx of demand has led to jet engine shortages for data center operators. Beyond the fact that engine manufacturers weren’t prepared for the AI boom, commercial aviation has already been suffering from its own shortages due to supply chain and engine design issues even before data center developers started buying up turbines.

Turbine blade and vane manufacturing is one of the biggest bottlenecks in jet engine production right now. The blades used in these engines are difficult to build, with one batch often requiring 60 to 90 weeks to produce from start to finish. That’s because these are specialized parts that are subjected to extreme forces and temperatures, especially in the core of the engine. Even if the engines that these blades will end up on are bolted to the ground or strapped to a trailer instead of hanging under the wing of an airliner, manufacturing them still requires the same level of care and precision.

Because of this, it seems that Musk wants to take things into his own hands by making SpaceX manufacture its own turbine blades. He says this move could cut deliveries by 18 months, allowing xAI to get brand-new turbine generators much faster instead of waiting behind a long queue expected to stretch into 2030.

SpaceX and Tesla aren’t abandoning solar power, but Musk says that “natural gas will still be needed to supplement and bootstrap solar for several years.” Because of this, it seems that he’s willing to invest in parts of turbine manufacturing as demand for turbine generators for data centers increases in the coming years. He has even reportedly quietly bought a portable gas and diesel turbine fleet for around a billion dollars, possibly to take advantage of this boom.

It’s unclear how Elon Musk intends to make turbine blades and vanes, especially given how complicated the process is. Nevertheless, he’s no stranger to tackling “impossible” problems, especially given his track record with Tesla and SpaceX.

Elon Musk told employees of SpaceX that the power capacity of the company's xAI data centers will increase by 7x to 10GW by late 2027. If this happens, the company's data centers will bring the company some $300 billion – $500 billion in revenue per year, according to Musk. The claim comes as SpaceX's market capitalization dropped by nearly $570 billion in less than two months. Meanwhile, the combined performance of the cluster will by far outpace not only all supercomputers in the Top 500, but also all AI clusters running today.

"We have already built the most powerful AI training clusters in the world," Musk told SpaceX employees at a meeting. "What we expect to do by the end of next year is about 10 times more than what we have done thus far. […] So, we are aiming to get to 10 GW [of compute] by the end of next year. […] If the value per watt is probably going to be $30 to $50, which means if we bring 10 GW of AI compute online by the end of next year, it will be $300 to $500 billion a year in revenue. Big numbers."

A lot of power

At present, SpaceX's xAI data centers in Memphis and Southaven have a rated power draw of 1.4 GW. The company plans to increase the electrical capacity of its data centers to 10 GW by the end of 2027, or by around sevenfold in roughly 1.5 years. It should be noted that AI infrastructure with a 'nameplate power draw' of 1.4 GW by far does not offer compute capacity of 1.4 GW.

A large AI data center with a power usage effectiveness (PUE) of roughly 1.2 would have around 1.17 GW available to IT equipment (i.e., 230 MW is used by cooling, pumps, fans, humidification/dehumidification, lighting, power distribution losses, UPS losses, and other facility systems). Not all of that 1.17 GW goes to AI accelerators: CPUs, memory, networking, and storage consume a meaningful share. If perhaps 70% – 80% of IT power ultimately corresponds to accelerators, we might be looking at roughly 0.8 GW – 0.95 GW of accelerator power in the case of a 1.4 GW data center.

Loads of FLOPS

Compute capacity is not measured in Watts; it is measured in floating-point operations per second (FLOPS). Keeping in mind that currently xAI uses a mix of Hopper- and Blackwell-based accelerators, it is hard to determine how much compute xAI has today. Since xAI seems to be betting primarily at Nvidia's Vera Rubin systems from now on, we can make a more or less educated guess about the company's Rubin-based compute capability the company will have by the end of 2027.

Assuming that all of the new 8.6 GW nameplate power draw will be based on Nvidia's NVL72 VR200 rack-scale systems and the PUE of around 1.2, the IT power budget of the new capacity will be 6.88 GW. Actual Rubin AI accelerators will get between 4.816 GW and 5.504 GW of power depending on how much of the IT power will correspond to these GPUs. Each Rubin GPU is expected to consume 2.3 kW of power in Max-P configuration. As a result, xAI's clusters will house between 2.094 million and 2.393 million Rubin GPUs in Max-P mode, or 29,083 and 33,236 NVL72 VR200 systems.

The performance of the NVL72 VR200 system is well known, so depending on the number of these machines that xAI will deploy by the end of 2027, we are looking at rather formidable numbers. NVFP4 inference performance of the cluster will be between 105 and 120 ExaFLOPS; NVFP4 training performance will range from 73 to 84 ExaFLOPS; FP6/FP8 training capability is projected between 37 and 42 EFLOPS, whereas native FP64 compute will total 70 – 80 EFLOPS. Of course, we are dealing with very rough numbers here as some systems may not work in Max-P configuration.

To put the numbers into context. The total combined FP64 performance of all systems on the Top 500 list is 18.73 EFLOPS. xAI will have 3.7X – 4.3X more than that if the cluster is deployed. As for AI performance, 105 – 120 NVFP4 EFLOPS inference and 73 – 84 NVFP4 EFLOPS training put this cluster in a whole different league from anything publicly operating right now, meaning that we are talking about dramatically more sophisticated AI models coming. Whether or not the combined xAI compute capability will enable the company to earn $300 billion – $500 billion per year is something that remains to be seen, as SpaceX is not the only company selling compute capacity to AI companies, and the competition will likely be rough.

Yet, it is about time for Musk to make comments like this, as after topping $2.44 trillion in market capitalization on June 20, SpaceX dropped to $1.43 trillion on August 1, but rebounded to $1.87 trillion on August 12.

Most megafactories usually take years to go from conceptualization to construction, but a recent drone flyover of the Terafab showed that progress has already started on the ground less than five months after Musk unveiled it. However, the video doesn’t do justice to the true scale of its footprint, so X user Nic Cruz Patane created a visualization to help us understand how large the chip manufacturing facility is.

The site will reportedly have a floor space of at least 100 million square feet, making it larger than Giga Texas (10 million sq. ft), the Pentagon (6.6 million sq. ft), Apple Park (2.82 million sq. ft), and the Mall of America (5.6 million sq. ft), combined. This also makes it significantly larger than New Century Global Center in Chengdu, China, with has an interior space of “just” 18.9 million sq. ft.

While this might seem like an absurd amount of space for chip manufacturing, it appears that the Terafab will need it because it’s going to be more than just a chip fab making AI processors — instead, it will be an all-in-one facility that will produce logic and memory chips, as well as have lithography, packaging, and testing under one roof.

Elon Musk started talking about building his own chip manufacturing facility in late 2025 and officially announced the project in March of this year. The reasoning behind this project is that both SpaceX and Tesla will require at least 1TW of compute, which is more than ten times that current global chip supply.

Nvidia CEO Jensen Huang warned that a project like this will be an “extremely hard” challenge, but it appears that Musk is willing to put his massive resources on the line for this. Intel CEO Lip-Bu Tan even said that he can “think of no better partner than Elon Musk” to explore “unconventional” ways of chip manufacturing.

Musk is no stranger to both leading and funding projects that otherwise seemed impossible. Although he did not found Tesla, his investment and leadership in the company led it to become an industry trailblazer in EVs. He fundamentally changed commercial space travel with SpaceX; something that used to be the purview of NASA and other national governments, and he also broke a record when he set up 100,000 Nvidia H200 GPUs in just 19 days back in 2024 — a process which Huang said usually takes four years.

It seems that Terafab is Musk’s biggest project to date, which is estimated to require up to $119 billion in investments. But even though it seems that this project already has a secure customer base in SpaceX and Tesla, the former acknowledges that there’s a risk that this ambitious megafactory may not be successful.

Elon Musk on Tuesday said in an X post that SpaceX and xAI will exclusively use Nvidia GPUs because 'they are the best.' He later clarified during SpaceX's earnings call that Nvidia's Vera Rubin NVL72 rack-scale system's design is above everything else that is available today, which is certainly praise for Nvidia, but not such a good sign for other developers of merchant AI accelerators.

"Going forward, we have decided to build exclusively on Nvidia, because we think the Vera Rubin architecture is the best architecture," Elon Musk said during SpaceX's earnings call. "We think it is the best AI computer, and we greatly value our close cooperation and partnership on many levels with Nvidia. We are exclusive to Nvidia. […] We think the design of the NVL72 VR[200] computer is a much better design than, say, having a standard rack style design."

Historically, xAI has exclusively used Nvidia's Hopper and, more recently, Blackwell hardware to train multiple generations of Grok. Although AMD has used Grok-1 on its Instinct MI300X accelerators, there has never been a public announcement or credible evidence that xAI has evaluated or used AMD Instinct, or other non-Nvidia accelerators in production. xAI's Colossus supercomputers have been using Nvidia's accelerators for years, so the official exclusivity looks more like a formality that gives a strong testament for Nvidia rather than a decision that was hard to make.

When it comes to the praise of the cable-less design of compute trays in Nvidia's Vera Rubin NVL72 VR200 rack system, then Musk's admiration of this architecture is understandable, as while expensive, such trays greatly improve serviceability, assembly speed, and reliability by eliminating a large number of manual cable and hose connections that are common sources of installation errors and failures.

Interestingly, but Musk's SpaceX plans to deploy Vera Rubin not only in its own and xAI's data centers, but also in space.

"With respect to the Starmind AI satellite, which will be essentially an optimized Vera Rubin NVL72 computer, this is not some sort of far future distant thing; we expect to start launching this next year," Musk said. "We think the design of the NVL72 VR[200] computer is a much better design than, say, having a standard rack style design. We expect to actually deploy this on the ground as well as in orbit, because we think it is going to be a radical simplification of the normal NVL72 rack."

Deploying an NVL72-scale machine will be by far a more ambitious project than Nvidia has in mind with its Space-1 Vera Rubin Module that is designed to deploy several, perhaps a dozen, of Rubin AI accelerators in space. 36 Vera CPUs and 72 Rubin AI GPUs offer rather formidable performance, though many questions remain about the cooling and reliability of such racks in space.

Drone flyovers of Elon Musk’s new Advanced Technology Chip Fab (ATCF) in Texas have been shared on social media. The videos and photos come courtesy of flight instructor and drone videographer Joe Tegtmeyer (@JoeTegtmeyer), who regularly documents the progress of Giga Texas and Starbase projects. Considering that the fab was only announced on March 21 this year, groundwork has been brisk, and in a follow-up post, Tegtmeyer states progress has “hit another gear.”

In the above post, the all-things-space enthusiast notes that the ATCF already appears to be very well defined. “GeoPiers are at work on the part of the foundation that has had gravel mix placed on the top soil and more work grading on the south end,” he explains.

A few days later, there was an update with progress clearly accelerating, according to Tegtmeyer. As well as commenting on the shape of the facility becoming ever clearer and construction materials continuing to be stockpiled, there are other important signs of progress. Specifically, “4 new permits were filed in the past few days for the large trailer complex that houses the general contractors and the temporary Tesla offices for the new facility,” noted the enthusiast. “[It is] a great sign that things are progressing rapidly behind the scenes to fit out the facility when construction progresses far enough to allow for equipment installation.”

Importantly, Tegtmeyer reminds his followers that the ATCF is not the Terafab that will be built ~ 100 miles or so to the East in Grimes County, Texas. Rather, the ATCF is the equally vital but “smaller development facility that is the first part of the overall AI Chip development program.”

The ATCF is a joint Tesla–SpaceX facility, and is a keystone for the Tesla, SpaceX, and xAI accelerator chips to come. It is expected that chips from the ATCF will combine logic, memory, and advanced packaging under one roof. Projects spawned from here are destined to support Tesla cars and Robotaxis, Optimus robots, and upcoming Earth-orbiting AI data centers.

That’s distinct from the much larger, multi-phase, vertically integrated, 1TW/year Terafab megaproject, which will see collabs between Tesla, SpaceX, xAI, and Intel. It has massive AI computer production ambitions to feed terrestrial and space-based AI systems. We are still awaiting evidence that the Terafab has moved beyond the pre-construction phase.

If there were any doubt about the seriousness of Musk's semiconductor design and fabrication ambitions in these and other progress reports, ASML CEO Christophe Fouquet recently confirmed talks with Musk had taken place about building one of the largest chip manufacturing operations ever attempted. SpaceX has also already filed for a $55 billion facility in Grimes County, Texas, with potential expansion costs reaching $119 billion, and phase one potentially beginning before the end of the year. Meanwhile, it is good to see the rapid progress of the smaller ATCF.

Elon Musk’s Colossus data centers that sit near the border between Tennessee and Mississippi will finally be removed starting this month. According to the company, the 69 temporary mobile turbines, which have been the subject of a lawsuit that claims they have been causing pollution, are going to be completely removed by July 2027, meaning it will take the company 12 months to withdraw the trailer-mounted generators from its premises. This may sound confusing, as they’re “portable” generators, after all, but it seems that SpaceXAI is removing them in phases as its 1.2GW power plant slowly comes online.

SpaceXAI achieved one of the fastest data center deployments ever after it set up 100,000 Nvidia H200 GPUs in 19 days — something that Nvidia CEO Jensen Huang said usually takes four years or more. Musk achieved this by bringing in his own power instead of waiting to get connected to the grid, which was considered a novel idea at that time. Today, a few data center operators, like OpenAI, are following Musk’s footsteps and deploying their own turbines to power their servers without relying on other providers.

But even though the idea feels innovative, the community surrounding the Colossus 1 and Colossus 2 data centers has been complaining about the pollution that these mobile turbines bring. They say that these turbines didn’t have the required permits to operate, although the company argued that the mobile and temporary nature of these units exempted them. The EPA said earlier this year that these units aren’t exempt from permits, but SpaceXAI continued to operate them anyway. It has even got to the point that the NAACP filed a case over these unpermitted turbines, although the DOJ weighed in, saying that removing them would put national security at risk as Colossus 2 “supports mission-critical operations.”

Despite that, it seems that SpaceXAI has finally settled into an agreement with the Mississippi Department of Environmental Quality. It’s if the 1.2GW power plant replacing these mobile turbines is the same one that Musk is importing from overseas, but the important part is that it’s approved under a Clean Air Act permit. Aside from that, the company also said that it’s equipping all its mobile turbines with “advanced emission control technologies,” which should reduce the environmental impact of its power sources.

Elon Musk’s Colossus 1 and 2 data centers are in hot water for allegedly using unpermitted mobile natural gas turbines to generate the power they need. But even though he also owns a solar power generation and large-scale battery storage business through Tesla Energy, Electrek reports that he instead doubled down on mobile generators after purchasing APR Energy. It’s not exactly known how much Musk paid for the company, but disclosures revealed that he spent more than $50 million on the 5% stake held by a minority shareholder. This meant that he likely poured at least a billion dollars into the entire firm if every shareholder received the same amount.

Deals of this magnitude often come with press releases, but it was only made public because of a Federal Trade Commission (FTC) early termination notice that approved it without requiring further review. It’s unclear why Musk did not publicize it, but SpaceXAI is currently facing allegations that its data centers in Memphis, Tennessee, are generating massive amounts of pollution that mostly affect nearby black communities. It makes financial sense for Musk to acquire APR Energy, especially if he’s spending millions of dollars renting these generators. However, he’s also trying to win over his data centers’ neighbors, like giving a 50% discount on all residential Starlink plans in Memphis and Southaven, and news like this would certainly undermine his efforts.

It’s understandable why SpaceXAI wants to continue using these mobile turbine generators instead of connecting directly to the grid. The massive amounts of power that these data centers demand, with Musk aiming for a 1-gigawatt capacity, means that the infrastructure behind that must be upgraded. It would also take months, if not years, before his sites could get approved to connect to the grid. Aside from having to go through several regulatory hoops, it would also likely face stiff resistance from the community who is afraid of experiencing the same “irreversible” 76% price spike that PJM imposed that’s being blamed on data centers.

But even without a fixed powerplant (which Musk is reportedly importing), SpaceXAI is already facing opposition from the community. The residents surrounding the sites have already filed a lawsuit against SpaceXAI and Elon Musk, but it will likely be an uphill battle, especially as the Department of Justice (DOJ) has weighed in, saying that Colossus 2 “supports mission-critical operations” for national security. We still don’t know what will happen to Elon Musk’s turbines, especially as the hearings are yet to take place; but in the meantime, nearby residents have no choice but to accept the alleged additional risk and pollution that these mobile generators bring.

Elon Musk's Colossus 2 xAI data center, which runs independently of the power grid through on-site natural gas turbines, is said to be releasing thousands of tons of nitrogen oxide and carbon monoxide every year. According to Reuters, the company has installed 59 temporary, mobile natural gas turbines without permission, and these unpermitted portable units mostly heavily affect the communities surrounding the site, which happen to be predominantly black and are already suffering disproportionately high lung disease rates. xAI has claimed that it’s running 27 turbines without any permits, saying that it’s exempted because of their temporary nature.

Elon Musk’s alleged use of illegal turbines isn’t a new issue, with the community discovering that it’s been using over 30 gas turbines on the site, despite only having an ongoing application for 15 in July 2025. The company said that these turbines are exempted from the permitting process, as they are not permanent installations and will be moved within 364 days. The Environmental Protection Agency (EPA) issued a ruling earlier this year that removed all exceptions, but told Reuters that “it’s considering changes allowing ‘regulatory flexibilities’ for portable units while continuing to protect public health.”

The Colossus data centers were put up in record time, and Musk had to bring his own energy sources to achieve this. That’s because connecting to the grid could take years, especially if the grid must be upgraded to deliver his 1-GW capacity target. However, the Clean Air Act permitting process could take a similarly long time, with the report suggesting xAI bypassed it completely just to achieve its goal. Adding to the complexity, while the data center is located in Tennessee, Reuters reports that "at least" 57 of the 59 turbines are actually located just over the state line in Mississippi, which issued a permit for 41 permanent turbines in March. xAI and Mississippi environmental regulators claim the turbines are mobile and therefore don't need permits, but they also aren't covered by the permit for 41 permanent turbines.

This did not sit well with the communities surrounding the data centers, especially Colossus 2, which sat near the border of Tennessee and Mississippi. Because of this, xAI (now called SpaceXAI after its recent merger with Space X) is facing a lawsuit from the NAACP, which alleges that the operation of these unpermitted turbines resulted in an 111% increase in nitrogen oxide exhaust, an 83% increase in PM2.5 airborne particles, and an 88% increase in formaldehyde emissions. The Reuters investigation says that just 30 of the 59 turbines listed could emit 2,500 tons of nitrogen oxide, 4,000 tons of carbon monoxide, and 22 tons of formaldehyde annually — way above the 100-ton nitrogen oxide threshold that the Clean Air Act set for turbines to operate without a permit.

These pollutants are proven to have adverse effects on the health of the people living within a five-mile radius of the source, and census data showed that the residents living in the affected area are predominantly black. Since Colossus 2 straddles a state boundary, the publication listed the data for two counties — DeSoto County, Mississippi, and Shelby County, Tennessee. Statistics show that about 46% of the population in the former and 94% in the latter are black, which is significantly higher compared to the 33% and 52% in the rest of the counties.

While the report did not say that these communities were deliberately targeted, it also pointed to a 2022 study that showed that areas once redlined by banks still suffer in the present day from higher air pollutant emissions. SpaceXAI recently announced an automatic 50% discount and free hardware rentals on Starlink plans for people living near Colossus 1 and 2, with SpaceX VP for Starlink Michael Nicolls saying on X, “The unique capabilities of the Colossus datacenters could not be accomplished without the partnership and support from the local Memphis community.” While this may bring some benefit to already existing Starlink users, some say that this is merely a PR stunt to help give the company a better image as the community is battling the air and noise pollution they bring to the area.

Elon Musk has received the go-ahead from the Federal Trade Commission (FTC) to acquire Mesh Optical Technologies, an AI infrastructure startup that develops light-based networking hardware for data centers. Records published by the FTC on June 25 show that the regulatory body granted early termination of its antitrust review of the transaction, permitting Musk to procure Mesh. While the deal is yet to be finalized, with no official statement from either party, the government's green light indicates it’s all but done, as this was the last hurdle.

Interestingly, Mesh was founded by three former SpaceX employees who helped develop the Starlink optical communication links that keep thousands of satellites interconnected. So, why is Musk — who is simultaneously building the world's largest multibillion-dollar semiconductor manufacturing facility and an 11-million-square-foot orbital data center factory — seeking to own a company founded by his former employees? The answer appears to be optical interconnects, a critical technology that connects all three.

The connection problem: AI's latest bottleneck

As AI continues to grow in capability and user base, so do the enabling AI clusters, many of which now comprise tens to hundreds of thousands of processors. The hardest problem in scaling an AI cluster has evolved beyond making the chips faster to moving data between them. Training and inference tasks on frontier AI models are split across thousands of GPUs using parallel-computing techniques, requiring the processors to exchange enormous volumes of data every fraction of a second.

While per-chip compute capacity has raced ahead, the bandwidth linking those chips has not kept pace, a mismatch the industry refers to as the "I/O wall." The processors mostly communicate via copper interconnects, which currently dominate AI clusters. However, copper presents inherent limitations. As per-lane signaling climbs toward 200 gigabits per second (Gbps), attenuation, crosstalk, and the skin effect all worsen at higher frequencies, driving up power and corrupting the signal until passive copper becomes impractical beyond a meter or two.

To overcome these constraints, the industry is increasingly turning to optical networking, bringing the technology closer to the processor. Optical links use transceivers to convert a chip's electrical signals into light for transmission over fiber, then convert them back into electrical signals at the receiving end. They can carry far more data over much longer distances while consuming less power than equivalent high-speed copper connections, making them increasingly essential as AI clusters grow larger. Chipmakers and networking vendors are racing to deliver faster 800G and 1.6T optical transceivers while shortening electrical paths with co-packaged optics, which place the optical engine alongside the switch ASIC (application-specific integrated circuit).

This shift has transformed optical interconnects from a supporting technology into one of the industry's most strategically important AI infrastructure markets, attracting billions of dollars in investments and resulting in major partnerships for new and existing industry players. One such player is Mesh, the optical hardware startup that has drawn the interest of the world’s richest man.

A mesh solution to Musk’s ambition?

Elon Musk has been one of the most aggressive players in the AI industry. After co-founding OpenAI, he went on to launch a proprietary company, xAI, before turning his focus to building data centers. In less than two years, xAI deployed the Colossus supercomputer with over 200,000 Nvidia Hopper- and Blackwell-generation accelerators. Colossus 2, with a long-term target of 1 million GPUs, is already operational. For Musk, however, buying the chips was not enough. Why not build them, too?

Characteristic of the world's richest man’s preference for complete vertical integration, SpaceX — in collaboration with Tesla and xAI — is now building Terafab, a vertically integrated, multi-billion-dollar semiconductor manufacturing facility aimed at producing chips capable of delivering an unprecedented over 1 terawatt of AI compute capacity annually. Located in Austin, Texas, the colossal facility aims to consolidate every stage of chip production under one roof, handling everything from logic and memory fabrication to advanced packaging and testing. An ambitious project that we've also analyzed for its feasibility.

The facility's output will serve to meet the chip needs of the broader AI industry, as well as those of Musk’s xAI, self-driving vehicles, Optimus humanoid robots, and SpaceX's orbital AI data center plans. Musk says 80% of Terafab's total compute output is ultimately destined for Earth orbit to support SpaceX's orbital data centers.

“But there aren't any data centers floating around in space,” observers may point out. Introducing Gigasat, Musk's 11-million-square-foot fix for that reality. Gigasat is yet another massive facility under construction, this time for manufacturing everything needed for SpaceX’s AI1 satellite, the company's most likely world-first orbital data center with 150 kW of compute.

At first glance, everything seems in place for the next generation of Ultra-capable AI infrastructure. However, there is one critical missing piece in this stack, one that we've established earlier. Hundreds of gigawatts of extremely powerful silicon are not particularly useful if the data can't move between the dies fast enough in AI clusters, whether on the ground or in space. The industry-prevalent copper hits a wall long before you reach the scale Musk is chasing. Hence, the need for the missing piece: optical interconnects.

This brings us to Mesh, a manufacturer of precisely that missing piece. Mesh Optical Technologies is a US optical communications startup that develops high-speed optical interconnect hardware — optical transceivers that convert a chip's electrical signals into light for high-speed transmission over fiber — for AI data centers and space communications.

Its flagship product, the Alpha C1, supports 800G and 1.6T data rates and reportedly draws about a third of the power of competing modules, using a flip-chip die-bonding process the company says makes the optical engine repeatable at the volume — potentially millions of links — that AI clusters demand.

These are the characteristics needed to seamlessly interconnect the next-generation terrestrial AI supercomputers and, potentially, future space-based computing platforms, which Terafab aims to deliver. An added benefit is the space-related experience of the three Mesh founders, who happen to be ex-SpaceX employees who helped build the laser-based inter-satellite links that connect Starlink's constellation.

Again, in typical Musk fashion, rather than simply buying the hardware, he is moving to acquire the entire company, gaining full control of its R&D and supply chain. Should the deal — which is all but done — go through, Musk will own the full stack of critical infrastructure needed to power the future of the AI industry.

Smart money is flowing to optical interconnects

The SpaceX ecosystem is just one of many entities that recognize the immense technical and economic importance of optical networking in AI. AI chipmakers are actively investing in the optical supply chain to secure manufacturing capacity and prevent hardware bottlenecks.

Nvidia alone has committed a reported $4 billion across component makers Coherent and Lumentum to lock up supply. Elsewhere, several hyperscalers, including Microsoft, Meta, and OpenAI, have teamed up with hardware giants Broadcom, AMD, and Nvidia to establish an Optical Compute Interconnect (OCI) Multi-Source Agreement (MSA) group, with the goal of developing protocol-agnostic scale-up interconnection technology for AI clusters.

To counter chipmakers' dominance, entities such as Japan's NTT established the $500 million IOWN (Innovative Optical and Wireless Network) Fund. This fund explicitly targets the creation of an open photonic ecosystem to accelerate the global transition from copper to light-based AI clusters.

Then there are the smart-money moves by investors, as well as the rising balance sheets of companies. Lumentum stock reportedly soared 339% in 2025 and delivered an additional 135.4% return in the first five months of 2026 alone, while Fabrinet, Cisco, and Coherent all recorded significant revenue surges attributable to optical hardware sales, meaning that Musk's move to acquire Mesh is extremely prescient, given Terafab's ambition.

Elon Musk has slammed reports that SpaceX is developing a handheld AI device as "Utterly False," in a post on X. It follows a report from the Wall Street Journal on Wednesday claiming that SpaceX had demonstrated an early prototype of a handheld device featuring xAI's artificial intelligence technologies and a proprietary operating system to a small group of investors ahead of the company's initial public offering.

The handheld device from SpaceX is reportedly thinner than Apple's iPhone, is based on a Qualcomm Snapdragon system-on-chip, and runs a proprietary operating system, according to the WSJ story. The main selling point of the device is its artificial intelligence technologies from xAI. However, the report does not elaborate on their nature or how they integrate with the operating system. The concept device remains in its infancy and may never become a commercial product. Furthermore, assuming that it is in its early stages of development, its final look and specifications would likely differ significantly from the prototype.

Earlier this year, Reuters reported that SpaceX was developing a smartphone, citing its sources, which reportedly stressed that SpaceX has had plans for a handset for years. At the time, Musk told Reuters that a hypothetical Starlink phone would be 'not out of the question at some point,' but admitted that it would be an AI-centric device that would be 'very different than current phones.' Nonetheless, in an X post, Musk denied his company was building 'a phone.' Based on the comment Musk made today, SpaceX is still not developing a smartphone-like device.

Meanwhile, this would not be the first time Musk has denied something that later turns out to be true. After Reuters reported Tesla had canceled its inexpensive Model 2 vehicle in April, 2024, Musk replied, 'Reuters is lying (again)' without elaborating. Tesla still has not launched its low-cost electric vehicle, but prioritized Robotaxi instead. Furthermore, the company has not touched upon Model 2 in its conference calls in detail in the years that followed, essentially confirming that the entry-level Model 2 in the form that was envisioned before 2024 has been cancelled.

Building a smartphone that connects to Starlink satellites and terrestrial 5G networks is theoretically possible: there are 3GPP Release-18 and 3GPP Release-19 5G-NTN specifications that are designed to achieve just that, and many modern devices already support texting using NTNs. For a mobile device that supports both 5G and NTN networks today, the biggest challenges are to build a modem and a front-end module that can hit the right balance between performance, reliability, area, and power consumption. Of course, the constellation itself has to offer enough 'backbone' bandwidth to support global communications.

While an always-connected handheld device with advanced AI capabilities would, from many points of view, reflect Musk's long-standing ambition to create an 'everything app,' it would automatically make SpaceX compete against companies like Apple, Google, Samsung, and many other multinational conglomerates. Tough competition is arguably not something that any CEO would like to admit, especially when the product in question is in its infancy and there is an IPO ahead.

Tesla has hired Gary Jiang, an Intel veteran who most recently was responsible for installing equipment and transferring Intel's leading-edge 18A technology process from development fab in Oregon to the company's high-volume fab in Arizona, as spotted by Electrek.co. The appointment marks the first publicly identified senior leadership hire for Elon Musk's semiconductor production project, Terafab, which demonstrates Tesla's effort to build an experienced semiconductor manufacturing organization from the ground up by hiring veterans from other companies.

Tesla poaches an Intel veteran

Gary Jiang joined Tesla in June 2026 after spending over 17 years at Intel, according to his LinkedIn profile. Interestingly, there is little to glean about his current role from his LinkedIn profile, aside from noting that he is a director at Tesla. His final position at Intel was as Factory Manager, where he oversaw the construction of the production facility, the installation of fabrication equipment, factory startup, product certification, preparation for high-volume manufacturing, and, ultimately, the transfer of Intel 18A technology from the development fab in Oregon to high-volume Fab 52 in Arizona.

Earlier in his Intel career, Jiang held multiple management positions at the company's Ocotillo campus in Chandler, Arizona, where he managed technician teams accountable for startup, ramp, yield, and output for 22nm, 14nm, and 10nm-class process technologies (which include Intel 10nm SuperFin and 10nm Enhanced SuperFin/ Intel 7) at Fab 32 and Fab 42.

Tesla has been looking for a Technical Program Manager (TPM) for semiconductor infrastructure, focused on end-to-end fab program delivery, since March, but without any success, as the job listing is still listed on the company's website. Therefore, Terafab — the joint initiative between Tesla, SpaceX, and xAI — still does not have a formal leader who is going to lead the whole project.

In his most recent role at Intel, Gary Jiang worked closely with supply chain, finance, and materials logistics for new factory planning for output, wafer cost, yield, and profit & loss, according to his LinkedIn profile. He also managed the billion-dollar capital equipment and startup of the fab. Hence, without any doubt, Jiang appears to have been one of the senior manufacturing leaders responsible for building and equipping Intel's new 18A-capable manufacturing facilities in Arizona (primarily Fab 52, and potentially Fab 62 as the campus expands). However, it would still be inaccurate to say he was the person responsible for building Fab 52 alone.

Jiang's skills roughly match what one would expect from a senior manufacturing executive helping commission a new leading-edge fab, so he will be instrumental in turning a newly constructed fab shell (or even cleanroom) into a production-ready semiconductor manufacturing facility.

However, he did not oversee the entire Fab 52/Fab 62 program and was not responsible for every stage of the project — from permitting and groundbreaking to construction, tool installation, and the ramp to high-volume manufacturing. Likewise, he is unlikely to lead the Terafab project as a whole. Nonetheless, given that Terafab is set to license Intel's 14A process technology, Gary Jiang is probably among the best candidates to equip a fab for an Intel manufacturing node.

One major caveat

In fact, one of the most confusing parts about Tesla's hiring people to work at Terafab is that Tesla itself will not own any high-volume semiconductor production facilities; SpaceX will, according to Elon Musk.

In the near term, Tesla plans to build a $3 billion semiconductor R&D center at its Texas campus. The facility will house a small pilot line capable of processing a few thousand wafers per month to develop and validate new manufacturing technologies before they are scaled for commercial production.

Once the pilot line shows signs of success, SpaceX is expected to construct a full-scale high-volume manufacturing fab. However, coordinating a joint project between Tesla and SpaceX will add complexity, as major decisions require approval from both companies' boards and must undergo conflict-of-interest reviews, which will likely slow execution.

That said, given that Gary Jiang was hired by Tesla, not SpaceX, his responsibilities could be to equip and ramp a development facility at its Gigafactory Texas campus rather than build, equip, and ramp a high-volume fab for SpaceX. In any case, we are speculating here, and nothing can really stop SpaceX from hiring Jiang at some point down the line.

The Chinese government quietly approved the Space Computing Industry Innovation Center in early June, which aims to bring together rocket and satellite manufacturers, semiconductor fabs, and AI tech companies to build a space computing network. According to the Beijing government, this aims to “connect the entire industrial chain of space computing and boost the development of the satellite Internet of Things (IoT) sector. Research firm SemiAnalysis said on X that China made this move a week before Elon Musk announced his AI1 satellite, which will run AI workloads while orbiting in space.

The center is set to be officially launched later this month, and it will focus on six major research areas: highly reliable, heat-resistant space-native computing chips, high-performance hyper-interconnected space computing payloads, space computing satellite platforms and standard systems, space-based large models under constrained power conditions, integrated space-ground cloud-based measurement and control networking, and space computing power service-oriented and tokenized operations. These are designed to build an orbiting AI data center that will not rely on Earth-bound energy sources and will avoid the bottlenecks that many ground-based data center developments face today.

While Beijing made this quiet announcement earlier than Musk’s AI1 reveal, we should note that Elon already had technical details available during the interview. In fact, the world’s first trillionaire has been talking about compute in space since November last year and filed for a one-million-satellite Orbital Data Center System with the FCC in February 2026. Jeff Bezos is also getting into the game with the 51,600-satellite Project Sunrise set to operate in a sun-synchronous orbit.

What makes China’s announcement different, though, is that it’s making multiple companies work together to build a system. On the other hand, SpaceX and Blue Origin are going at it alone — the two companies are competitors, and it doesn’t look like they’re cooperating with each other to develop the technologies required for space-based AI compute. It even seems that the former is intent on vertical integration, with its new 11-million-square-foot (around 190 to 200 football fields) Gigasat factory and Musk’s TeraFab megaproject.

We’re unsure which technique will be more effective in the long run: having one or two companies pour massive resources into this megaproject (with its success or failure being solely borne by those firms) or making several smaller companies and institutions work together to build a Space Intelligent Computing Research Institute, with the output presumably available for use by Chinese firms. But one thing is certain: Beijing is taking space-based data centers seriously enough to pour resources into them — a significant move for a nation with ample excess electricity and available infrastructure to build power-hungry data centers.

The U.S. Department of Justice (DOJ) has filed a memorandum in response to NAACP’s lawsuit against Elon Musk’s xAI (now SpaceX) Colossus 2 data center. According to Wired, the federal government, through the DOJ, said that stopping the natural gas turbines needed to run the xAI data center “threatens American national, economic, and energy security by seeking to shut off the power supply for artificial-intelligence innovation that supports the Department of War’s military operations.” It further said that Grok is one of only four AI models the military and security agencies use to “support mission-critical operations across Secret and Top-Secret classified networks.”

Due to those purported national security interests, DOJ lawyers have joined xAI and the state of Missisippi in requesting that the lawsuit be dismissed.

The NAACP, through the Southern Environmental Law Center (SELC), sued xAI last year after an investigation discovered that Musk’s Colossus supercomputer facility used “illegal” generators to power its AI GPUs. The Memphis supercluster was launched in just 19 days — a major feat given that most projects of this scale usually take four years, according to Nvidia CEO Jensen Huang.

The site officially powered on in July 2024, but it wasn’t May 2025 that it became fully operational after it received 150MW of power from Memphis Light, Gas, and Water (MLGW) and the Tennessee Valley Authority (TVA). But instead of waiting months to get connected to the grid, xAI bridged the gap with mobile generators to get the electricity needed to run the hundreds of thousands of power-hungry GPUs.

It turns out that xAI failed to secure the permits needed to run the majority of these units. It’s been reported that the company applied for 15 portable turbines, but thermal images show at least 35 units on site. The company is allegedly using a loophole that allows it to run these units for 364 days without needing paperwork, but the Environmental Protect Agency (EPA) has since closed this loophole.

Aside from the offending generators in the first Colossus site, which is rented out to Anthropic, 27 natural gas turbines at Colossus 2 were cited as noncompliant in the initial lawsuit filed in April 2026.

However, as of May 2026, the SELC says that 57 turbines on the site are operating on site without a permit. According to the nonprofit, this resulted in a 111% increase in nitrogen oxide exhaust, an 83% jump in PM2.5 pollutants, and an 88% uptick in formaldehyde emissions since these generators were added. The lawsuit argues that these emissions endanger public health, and that continued use of the turbines “increases risks of asthma attacks and heart disease” in the surrounding communities.

In response to the DOJ's filing, the SELC issued the following statement: “With this filing, the Trump administration is launching an unprecedented attack on the public’s ability to defend themselves from illegal pollution. This is a blatant attempt to let well-connected corporations like xAI unlawfully pollute without any consequences, putting communities across the country at risk and threatening to open the door to large-scale pay-to-pollute corruption in the process,” SELC Litigation Director Kym Myer said. “The Department of Justice’s frivolous arguments fly in the face of decades of well-established legal precedent and we look forward to fighting them in court.”

The case is National Association for the Advancement of Colored People et al v. X.AI Corp. et al, filed in the United States District Court for the Northern District of Missourt.

Elon Musk has laid out the first detailed design of SpaceX's AI1 satellite in a 30-minute video posted to the company's X account, the opening generation of an orbital craft SpaceX wants to build by the million to run AI workloads off Earth's power grid. Carrying a 150 kW peak compute payload across a 70-meter deployed wingspan, the spacecraft uses an interchangeable hardware design that lets different chipmakers supply the processors. The timing of this announcement is no accident, coming just three days before SpaceX’s IPO, which is set to price on June 11th and trade on June 12th at a target valuation near $1.75 trillion.

In his announcement, Musk pegged the satellite’s compute payload at roughly the draw of a single Nvidia GB300 rack, which pulls around 140 kW on the ground. One AI1, in those terms, is about one rack in orbit. In terms of its overall specs, SpaceX disclosed an average compute payload of 120 kW, a peak of 150 kW, and a density of 70 kW per ton, with the craft operating at roughly 600 km.

A satellite with these specs comes with some serious space requirements, and its 70-meter deployed wingspan edges past the 68.4-meter span of a Boeing 747-8. As for the interchangeable compute, that leaves the platform open to whichever vendor ships the most competitive AI silicon, rather than locking it to a single supplier.

This interchangeability is no doubt important to Musk, not least because SpaceX can’t yet guarantee its own supply of chips. The company is currently building Terafab, a chip fab that’s running as a joint venture with Tesla, while its S-1 IPO filing warns it can’t currently secure enough chips.

That aside, the elephant in the room is cooling: a rack on Earth sheds heat into moving air and circulating water, neither of which exists in a vacuum, where the only viable route is radiating it away as infrared. AI1 features up to 110 m² of deployable liquid radiators, as well as redundant pumping loops and integrated micrometeroid shielding. By comparison, the International Space Station’s ETACS rejects roughly 70 kW of heat — around half of what’s needed to cool a 140 kW GB300 rack — across 422 m² of radiator at a cost of up to $500 million, according to SemiAnalysis.

Musk has previously waved off potential thermal critiques, telling SpaceNews back in March that it's "safe to say SpaceX knows how to do heat rejection in space" and pointing to the company's fleet of more than 10,000 Starlink satellites.

SpaceX filed with the FCC in January to launch up to a million orbital data center satellites and has already signed compute deals, including a $920 million-per-month agreement with Google. The model has prominent skeptics: OpenAI's Sam Altman called orbital data centers "ridiculous" earlier this year.

SpaceX has announced a new 11-million-square-foot Gigasat factory in Bastrop, Texas, dedicated to building the infrastructure needed to achieve the company's orbital data center goal. In an internally conducted interview posted on X on June 8, SpaceX CEO Elon Musk confirmed that the facility is expected to begin producing complete "AI satellites" by 2027. The company is targeting 1 gigawatt (GW) of orbital AI compute capacity by the end of next year, with plans to scale that figure by an order of magnitude annually thereafter.

During the interview, Musk unveiled the build and specs of the proposed AI1 satellite, the company’s take on orbital data centers. The satellite will span roughly 70 meters (229.66 feet), with a massive solar array — generating power at a density of 250 W/m² — making up the bulk of the structure. AI1 will also feature vertically oriented, double-sided radiators for cooling, with the 150-kilowatt (kW) peak compute payload positioned right in the middle of the structure.

The massive 11-million-square-foot Gigasat facility — more than ten times larger than Starfactory, SpaceX's current largest spacecraft manufacturing complex — will vertically integrate much of the AI1 satellite supply chain on a single campus. The facility will manufacture solar ingots and wafers, solar cells, printed circuit boards (PCBs), silicon-based electronic components, user terminals, gateways, and the AI1 satellites themselves. The 1,000-acre site will also include dedicated satellite development and testing facilities, warehousing and logistics infrastructure, and a large-scale AI satellite production line.

According to Musk, the solar manufacturing facilities are already under construction, while the AI satellite production building is about to break ground. SpaceX expects to be producing a "reasonable volume" of these orbital data centers by the end of 2027. While each satellite will carry 150 kW of compute power, the company aims to achieve 1 GW per year of space AI compute in that same time. That would mean launching on the order of more than 6,000 AI1 satellites in a single year. For context, Starlink has about 10,500 active satellites as of June 2026.

Musk hopes to scale to 100 GW per year by 2030 and even has eyes on Terrawatt-level computing, completely solar-powered in space. "This is what we are going to try to do and think we probably can do, which is to get to roughly an annualized rate of a gigawatt per year by the end of next year at Space AI compute. And then aspirationally, scale that by an order of magnitude per year. So in two and a half years, hitting an annualized rate of 10 gigawatts a year at Space. And three and a half years, maybe 100 gigawatts," he said, while also expressing a desire to one day scale to a terawatt per year, depending on progress in chip making.

The largest AI data center anyone has actually announced is Meta's Hyperion in Louisiana, designed to scale up to 5 GW and house roughly 2 million GPUs at full buildout, at over $100 billion — and even that only reaches its first 2 GW phase by 2030. xAI's own Colossus 2 in Memphis just expanded to nearly 2 GW of capacity, with 555,000 GPUs, for about $18 billion, making it the world's largest single-site AI installation. So 100 GW/year is approximately 20 Hyperions or 50 Colossus-2s per year.

Achieving this will take an unprecedented volume of chips, and Musk's answer is Terafab — a SpaceX/Tesla/xAI venture in Austin aiming to fab 1 terawatt of compute a year, roughly 100 to 200 million advanced chips, in a 100-million-square-foot plant. However, the project itself is being met with widespread skepticism. For starters, none of the three companies has ever made a chip, yet they're starting at the bleeding-edge 2nm node. Our in-depth Terafab industry analysis explores various other reasons why this skepticism is valid.

Multi-Gigawatt ambitions aside, Gigastat is a significant step towards orbital data center goals that are increasingly seen as a potential viable solution to the extreme power consumption of on-ground data centers. Not unexpectedly, SpaceX is leading the race. Manufacturing solar arrays, wiring, and satellite bodies at volume is largely conventional work — much of it built on technology SpaceX already produces for its Starlink V3 satellites, just at far greater scale — which is part of why a 2027 production start is credible.

ASML has confirmed that a group of disgruntled workers is pushing back hard against an invitation for Elon Musk to address the equipment maker’s closed annual tech conference in Den Bosch this Thursday. According to Dutch publication Eindhovens Dagblad (via DutchNews), employees have been airing their grievances on the company’s internal comms platform, with several threatening to skip his appearance altogether because of his involvement in U.S. politics and what staff described as "Nazi sympathies."

If the invitation is accepted, Musk could join CEO Christophe Fouquet by video link to discuss AI, robotics, space exploration, and semiconductor production, with the conversation centered around Terafab, the SpaceX and Tesla chip venture whose proposed Texas fab can’t reach production without ASML's machines.

Backlash began to surface on Viva Engage, ASML’s internal employee platform, where workers have argued that giving the controversial tech leader a platform clashes with the company’s stated commitment to an inclusive culture. In particular, ASML staff have specifically highlighted Musk’s political activities around the Trump administration, general anti-European rhetoric, and what staff described as “Nazi sympathies.” In March, an Amsterdam court banned the Grok image-generation app due to its abusive “undressing” image generation capabilities.

ASML is the sole monopoly supplier of EUV lithography systems, the tools needed to pattern transistors at the leading edge; fabs targeting advanced nodes have no viable alternative.

Every major foundry and memory maker, including TSMC, Samsung, SK hynix, Micron, and Intel, already holds orders with the company. Terafab, by contrast, has no path to leading-edge production that bypasses ASML, and the company’s CEO said last month that Musk is "very serious" about the project, noting that ventures like Terafab and Starlink would strain equipment makers' capacity over the coming years.

ASML hasn’t addressed the internal revolt directly, saying only to employees via Viva Engage that it’s committed to a workplace where everyone feels respected and is free to express their opinion.

Musk announced Terafab in March as a SpaceX and Tesla joint venture with an initial $20 billion budget, targeting 2nm production and a terawatt of annual compute for AI, robotics, and orbital data centers. SpaceX has since filed a property tax abatement application in Grimes County, Texas, for a fab costing $55 billion in its initial phases and up to $119 billion if all expansions proceed, with Intel set to contribute its 14A process technology. Outside estimates run higher, with Bernstein analysts arguing the full terawatt project would require roughly 358 fabs and around $5 trillion.

“ASML regularly invites technology leaders from the industry to share their insights. The invitation to Elon Musk took place in the context of the Terafab project, which is highly relevant to the semiconductor industry,” the company said.

SpaceX has won a 100% property tax abatement from Grimes County, Texas, for its proposed, massive $55 billion Terafab semiconductor chip manufacturing facility. According to a local news outlet, KBTX, Grimes County commissioners voted 4-1 on Wednesday, June 4th, to approve both a reinvestment zone designation and the tax abatement, which will fully exempt SpaceX from property taxes tied to the project in exchange for a regular payment instead.

In exchange for the tax exemption, SpaceX will instead remit a lump sum of $10 million to the county, followed by $20 million annually for 35 years. The vote — centered on a three-part proposal for the SpaceX Terafab facility, consisting of an obligation framework for jobs and infrastructure, a Tax Increment Reinvestment Zone designation, and a 35-year PILOT tax abatement agreement — followed a hearing that drew in more than 100 residents to the Grimes County courthouse.

Proponents of the proposals, including local officials, argued that the project promises massive economic investment, job creation, and national security benefits. Conversely, residents opposed to the project cited a lack of transparency in the approval process, potential strain on water and power infrastructure, and the destruction of rural identity. Commissioner David Tullos, who cast the lone “No” in the vote, questioned SpaceX’s absence in earlier meetings, saying that the hearing was the first time it had sent a representative since the project was announced. Tullos also questioned the company about the size of the proposed reinvestment zone and the company's plans for portions of the land included within it.

Several residents reportedly expressed deep concern about environmental impacts and land loss amid tears. In response, John Federspiel, senior director of Starlink Product Engineering at SpaceX, said: "We recognize that large projects bring legitimate questions about infrastructure and environmental stewardship. Our company is committed to proactively ‌addressing those ⁠concerns and taking care of them responsibly.”

Despite an apparent majority opposition from residents who urged the commissioners to delay the vote on the tax abatement — which public records show SpaceX applied for just last month — all proposals passed. A number of local residents expressed disappointment in the outcome, with many insisting that a 100% tax rebate — for a company about to launch the largest IPO in history with an expected $1.75 Trillion valuation — was too far.

Defending the arrangement in an X post on Wednesday, SpaceX owner and world's richest man, Elon Musk, said that the exemption was necessary to remain competitive with other chip manufacturers. “The reason SpaceX asked for this, which is standard practice for massive capital investments, is because Terafab will have a large number of extremely expensive machines for making chips. Property tax on these crazy money machines would put us at a serious competitive disadvantage relative to other chip fabs in the world,” Musk said.

He also implied that the county stands to significantly benefit from the project. “Something that perhaps isn’t clear is that, if this location works out (other locations are still in the running), SpaceX will still be paying an annual amount that increases tax revenue for Grimes County by ~25% and will be by far the biggest source of revenue for the county,” Musk argued.

SpaceX is advancing the Terafab project as part of its plans to expand beyond aerospace into computing infrastructure and domestic chip production, a strategic pivot investors see as vital for future growth. The company already owns Colossus 1, a massive data center it rented out to Anthropic, and is currently building Colossus 2.

A federal jury in Oakland, California, on Monday unanimously rejected every claim in Elon Musk's lawsuit against OpenAI, CEO Sam Altman, co-founder Greg Brockman, and Microsoft. The nine-member jury found that Musk filed too late, with all claims barred by the statute of limitations. Deliberations began at 8:30 a.m. Pacific and ended at 10:23 a.m. Judge Yvonne Gonzalez Rogers immediately accepted the verdict as her own.

Musk had sought around $130 billion in damages paid to OpenAI's nonprofit arm, the removal of Altman and Brockman from their leadership roles, and the dismantling of the for-profit entity that has turned OpenAI into an $852 billion company. The jury's finding on timeliness meant it never reached the underlying question of whether Altman and Brockman breached their duty to OpenAI's original nonprofit mission.

The case ultimately hinged on when Musk became aware of the alleged breach: California law imposes a three-year window for charitable trust claims and a two-year window for unjust enrichment. Musk testified that he waited to sue because he believed Altman's reassurances over the years, and that Microsoft's $10 billion investment in OpenAI's for-profit arm in 2023 was the moment he concluded the charity had been "stolen".

OpenAI's attorneys countered that Musk had known about the for-profit transition since at least 2017 and had even pushed for it himself, registering a company through his family office intended to serve as a for-profit version of OpenAI. "There's a substantial amount of evidence to support the jury's finding, which is why I was prepared to dismiss on the spot," Judge Gonzalez Rogers said after the verdict.

While Musk's legal team reserves the right to appeal, the judge suggested that it would be difficult because the statute of limitations question was a factual determination, not a legal ruling. The verdict ultimately removes the most prominent legal threat to OpenAI's ongoing restructuring from a nonprofit into a for-profit public benefit corporation.

The company closed a $122 billion funding round in March at an $852 billion valuation, with $30 billion from Nvidia, $50 billion from Amazon, and $30 billion from SoftBank. OpenAI has been preparing for a potential Q4 2026 IPO, though analysts at PitchBook recently suggested the timeline could slip into 2027 given the company's cost structure and $1.15 trillion in long-term infrastructure commitments.

Microsoft, which invested $13 billion in OpenAI between 2019 and 2023 and was named as a co-defendant for allegedly aiding the breach, was also cleared by the jury on the same statute of limitations grounds. "The finding of the jury confirms that what this lawsuit was was a hypocritical attempt to sabotage a competitor," OpenAI attorney William Savitt told reporters outside the courthouse, according to CNN.

Neither Musk, Altman, nor Brockman was present in court to hear the verdict. The three-week trial featured testimony from six tech billionaires, including OpenAI co-founder Ilya Sutskever, and hundreds of pages of private emails, text messages, and internal meeting notes entered into evidence.

Last week, Anthropic announced that it had struck a deal with SpaceX to lease all of the latter's Colossus 1 data center, with over 220,000 GPUs and 300 megawatts of compute capacity. The deal immediately raises questions, foremost among them: why would Musk lease one of xAI’s most aggressively hyped AI assets to a direct rival? With SpaceX's IPO just around the corner, a related strategy appears to be at play, but it also turns out that the system's mixed architecture with different types of GPUs may be a key reason Musk has decided to lease the system.

Anthropic says the newly acquired capacity will primarily be used to ease long-standing usage bottlenecks across Claude’s paid ecosystem. According to the company, the additional compute will enable significantly higher Claude Code limits, the removal of peak-hour throttling for Pro and Max subscribers, and substantially increased API request limits for Claude Opus models used by developers and enterprise customers.

The seemingly unlikely partnership — a complete turnaround of Musk's earlier stance on Anthropic — also reveals Anthropic is straining under the Claude ecosystem’s compute demands. The company says it needs the entire 300 MW AI supercluster just to improve the experience of using Claude.

Anthropic appears to have hit the compute wall

The earliest signs that Anthropic was struggling to keep up with the computing demands of its growing user base were the increasingly aggressive usage limits placed across Claude’s services. Free users frequently complained about rapidly exhausting tokens — the units Claude assigns for processing tasks. However, the restrictions extended beyond the free tier. Paid Pro, Max, Team, and Enterprise users also regularly encountered message caps, peak-hour throttling, API rate limits, and strict time-based usage ceilings on Claude Code sessions, particularly during periods of heavy demand.

It was clear that Anthropic was running out of inference capacity. While training an AI model is an expensive, one-time computational undertaking, serving that model to millions of users simultaneously creates a continuous, round-the-clock demand for compute that scales directly with every new user and every new query. The apparent solution is to build more data centers, which Anthropic is apparently pursuing via massive gigawatt deals with Amazon, Google, Microsoft, and Nvidia.

However, modern hyperscale AI data centers can cost tens of billions of dollars and take years to build. Utilities are increasingly struggling to supply sufficient electricity for AI projects, while land, transformers, cooling infrastructure, and high-end GPUs themselves remain constrained. There is also growing sentiment against AI infrastructure from local communities. We recently reported that a U.S. senator got physical with a reporter after a confrontation on a data center issue.

Anthropic's compute capacity problem was immediate and urgent, but the solution was significantly long-term. If only there were a massive AI supercluster with hundreds of megawatts of compute power just sitting there. Turns out there was: SpaceXAI’s Colossus 1. Following the deal, Colossus 1’s entire computing power now belongs to Anthropic — for now.

Musk, xAI, SpaceX, and an upcoming IPO

When Musk unveiled Colossus, it was framed as one of the clearest signs that xAI intended to compete seriously with OpenAI, Anthropic, and Google at the AI frontier. The Memphis-based cluster became famous for how quickly it was assembled. Tens of thousands of Nvidia GPUs were reportedly brought online in record time, eventually scaling to over 220,000 accelerators. Musk repeatedly boasted about xAI’s future compute ambitions, including plans to expand toward million-GPU-class systems through Colossus 2.

So why does he seem to have wrapped the whole thing in a neat little bow and handed it over to Anthropic, xAI's rival? One possible answer is utilization. Reports suggest that Colossus 1 may have had more available capacity than Grok’s current user base required. However, according to a detailed report by Mirae Asset Securities — a major South Korean investment bank — the bigger utilization issue was architectural. Colossus 1 is a heterogeneous cluster, mixing roughly 150,000 H100s, 50,000 H200s, and 20,000 GB200s — three different generations of Nvidia silicon running under one roof. This was largely a byproduct of how fast xAI assembled the cluster, with different GPU generations coming online as supply allowed, rather than a deliberate design choice.

For AI training, the heterogeneous configuration creates a significant efficiency problem. Distributed training requires every GPU in the cluster to complete each computational step simultaneously before the system can advance. When the faster GB200 chips complete their work first, the entire cluster waits for the slower H100s to catch up — a well-known bottleneck known as the straggler effect. At 220,000 chips, this effect is exponential.

As a result of these issues, xAI's real-world GPU utilization reportedly sat at just 11% — meaning 89% of the cluster's theoretical computing power was going to waste. For context, Meta and Google typically operate at 40% or above.

AI GPUs are not static assets that quietly sit on shelves, gaining value over time. They depreciate rapidly, consume enormous amounts of electricity, and require expensive maintenance and cooling infrastructure. Unused GPUs are effectively burning money.

From that perspective, Anthropic may have arrived at exactly the right moment. The company had exploding demand and an urgent need for ready-made compute, while SpaceX/xAI had a gigantic, not-so-great first-generation AI cluster. For Anthropic, however, the same cluster looked quite different. The company needed compute power for Inference — running queries through an already-trained model, which does not require the tight synchronization that training workloads demand. So, what was a structural inefficiency for xAI's training workloads is a workable infrastructure for Anthropic's inference needs.

Multiple reports suggest xAI is now heavily focused on Colossus 2, a far larger next-generation cluster reportedly aimed at gigawatt-scale AI infrastructure. Unlike Colossus 1's chaotic mix of chip generations, Colossus 2 is built entirely on Nvidia's Blackwell architecture — a homogeneous cluster where every GPU is identical. In a uniform cluster, every chip completes each training step at roughly the same time, allowing GPU utilization to theoretically surpass the range in which Meta and Google currently operate. xAI can also properly optimize its software stack for a single hardware generation rather than trying to serve three simultaneously.

According to the Mirae Asset report, xAI has already moved its core training workloads entirely onto Colossus 2, effectively treating Colossus 1 as a retired first-generation asset. In other words, Colossus 1 may have transitioned from "cutting-edge frontier training weapon" into a monetizable first-generation compute asset, while Musk continues to build towards xAI’s “takeover” with Colossus 2.

Musk has long treated his companies less like isolated entities and more like interconnected pieces of a broader ecosystem. Tesla technologies appear across SpaceX projects. SpaceX infrastructure supports xAI ambitions. xAI products increasingly feed into Musk’s wider platform strategy.

The deal also hints at another possibility: Musk could be positioning SpaceX/xAI as more of an AI cloud infrastructure provider. That would not be entirely surprising. xAI has already launched Grok Business and enterprise-focused offerings featuring APIs, security controls, audit logging, and corporate integrations. This also aligns with Musk’s reported plans for broader structural changes at SpaceX and xAI ahead of the company's upcoming IPO.

Earlier this year, Musk publicly attacked Anthropic and Claude, calling the company “misanthropic and evil.” Yet this week, he claimed he approved the deal after speaking with Anthropic executives and determining that “no one set off my evil detector.”

Mirae Asset’s analysts attempted to estimate the value of the Anthropic deal, using estimated hourly lease rates for different Nvidia GPU types. The analysts projected that Colossus 1 could theoretically generate roughly $5–6 billion in annual revenue. That nearly perfectly offsets xAI's annualized net loss of approximately $6 billion as of Q1 2026, effectively pulling the company to breakeven in a single contract.

For Anthropic, the analysts applied CEO Dario Amodei's own publicly stated estimate that roughly half of all AI industry compute spending goes toward inference, and that inference compute converts to revenue at a 3x multiplier. On that basis, the $5 billion being directed toward inference capacity could generate approximately $15 billion in incremental ARR — a significant addition to Anthropic's already rapidly growing revenue base.

Stellar ambition

Another critical aspect of the announcement involved “orbital AI compute capacity” — basically, data centers in space. Granted, it does sound like science fiction marketing language. But it directly ties into a core problem both companies, alongside several other AI giants, are increasingly facing: AI infrastructure is beginning to outgrow terrestrial constraints. So when a joint announcement comes from the world's largest AI company and the company that built the world’s largest reusable rocket system and operates thousands of active satellites in orbit, you best believe we may soon have data centers floating around in space.

Despite Mirae Asset’s analysis, the factual financial details of the Colossus deal are not publicly available. However, Anthropic recently raised $30 billion in a Series G funding round, valuing the company at $380 billion. It would not be too wild a guess to say some of that cash may have gone into funding the Colossus agreement. Then again, the company said last month that its annualized revenue run rate had already surpassed $30 billion, highlighting the staggering scale at which Claude’s business is now operating.

xAI built Colossus 1 fast — too fast, it turned out. The resulting mixed GPU architecture created structural training inefficiencies that made the cluster hard to justify as a long-term platform. With Colossus 2 now operational and built properly on uniform Blackwell hardware, Colossus 1 became a first-generation asset in search of a better use.

Anthropic, with explosive demand and not enough compute, provided exactly that. The deal converts what was effectively a depreciating liability into roughly $6 billion in annual revenue — enough to bring xAI close to breakeven. For Anthropic, the same compute could unlock an estimated $15 billion in additional ARR. Both companies got what they needed, and Musk gets a compelling infrastructure story heading into a potential IPO.

Anthropic announced in a press release on Wednesday that it has signed a deal with Elon Musk’s SpaceX to use the company's massive Colossus 1 data center. According to a corresponding announcement from SpaceXAI, the deal will give Anthropic access to all of the massive supercomputer. That's over 222,000 Nvidia GPUs — including powerful H100 and H200 chips alongside next-generation GB200 accelerator systems — and 300 megawatts plus of compute power.

Anthropic says this additional capacity will go toward improving the experience for paid Claude users — Pro, Max, Team, and Enterprise subscribers — via three key changes. Effective yesterday, Claude Code’s five-hour rate limits have doubled for all paid tiers. The company has also removed the peak hours limit reduction for Pro and Max. Lastly, it has “considerably” raised the API rate limits, the volume of requests developers can make, for Claude Opus models.

The announcement highlighted other similar agreements with Amazon, Google, and Microsoft, all aimed at building gigawatts of additional capacity. Anthropic also expressed interest in partnering with SpaceX to “multiple gigawatts of orbital AI compute capacity, basically data centers in space, as, according to SpaceX, “The compute required to train and operate the next generation of these systems is outpacing what terrestrial power, land, and cooling can deliver on the timelines that matter.”

The Colossus 1 deal means that the whole first-generation cluster, originally built to power xAI’s own Grok models, is now powering one of its direct AI rivals, as the company focuses on building Colossus 2. In an X post, Musk said he gave the green light to lease Colossus 1 to Anthropic after spending time with senior members of the company to “understand what they do to ensure Claude is good for humanity.” He claimed he “was impressed,” saying, “No one set off my evil detector.” The statement is a stark reversal of comments Musk made earlier this year about Anthropic, when he called Claude “misanthropic and evil."

In the press release, Anthropic also signaled that its compute expansion strategy extends far beyond raw processing power. The company said future infrastructure deployments will increasingly target international regions, such as Europe and Asia, to meet growing enterprise demand for local data residency and regulatory compliance, particularly in sectors like healthcare, finance, and government. It also stressed that future capacity partnerships will prioritize politically stable, democratic countries with secure AI supply chains, while exploring ways to offset increases in electricity costs and reinvest in communities hosting the data centers.

In addition to the compute deal announcement, Anthropic also unveiled on Wednesday a new Claude feature called 'dreaming,' designed to help its AI agents improve themselves between sessions. The feature allows Claude-powered agents to review previous work, identify recurring patterns and mistakes, and reorganize memory files that contain user preferences and contextual information, enabling the system to refine its behavior over time rather than starting each session from scratch.

Leaked excerpts from SpaceX's confidentially filed $1.75 trillion S-1 form shed some light on the company's business plans, which includes plans for it to build its own GPUs. The listing notes its intent to invest billions in production of some of the processors it needs internally as it does not have long-term supply agreements with its silicon suppliers. Interestingly, the silicon to be produced in-house is said to be GPUs, not specialized ASICs for AI acceleration, according to Reuters. However, the naming convention is still up for debate. The news comes on the heels of yesterday's blockbuster announcement that Musk will use Intel's 14A process node in its new TeraFab chipmaking venture, with SpaceX managing the manufacturing facilities.

The S-1 form seen by Reuters mentions 'manufacturing our own GPUs' as one of the reasons of the 'substantial capital expenditures' the company will incur in the future as it appears to lack ' long-term contracts with many of our ​direct chip suppliers.' While the fact that SpaceX will build and operate its own high-volume semiconductor manufacturing facility to produce silicon developed at Tesla was confirmed by Elon Musk, chief executive of Tesla and SpaceX, last night, the firm's plans to build its 'own GPUs' seems like something new.

Reuters recons that different companies name their AI accelerators differently. While AMD and Nvidia explicitly call them 'GPUs,' Google calls its AI accelerators 'TPUs,' Microsoft calls its Maia devices 'accelerators,' while SambaNova calls its AI chips 'RDUs.' Most of hyperscale cloud service providers and independent hardware vendors (IHVs) call their AI accelerators application specific integrated circuits, or ASICs. Since SpaceX does not clearly mention AI ASICs developed by Tesla, Reuters believes that SpaceX intends to design and produce something they call their 'own GPUs,' which would mean something different from Tesla's AI-series processors.

We have no idea whether SpaceX — or its xAI division — has the capability to design its own sophisticated custom silicon that would compete against AI GPUs/accelerators from AMD, Nvidia, Rebellions, or SambaNova. However, Elon Musk himself referred to Tesla's AI5 processor as a 'GPU' even though this chip cannot process computer graphics (at least not in a traditional way) due to a lack of special-purpose hardware.

"With the AI5, we we deleted the legacy GPU, or the traditional GPU, which is in AI4, but AI5 does not have the legacy GPU because it basically is a GPU," Musk said in a earnings conference call. "We also deleted the image signal processor. There is a long list of delitions that are very important."

Given the inconsistent naming of its AI accelerators at Tesla — mostly because they are aimed at very specific workloads — it is hard to verify whether SpaceX means producing Tesla's AI5 and/or AI6 hardware, or indeed in-house designed 'GPUs.'

Since the S-1 form has been filed confidentially, Tom's Hardware could not verify its content.

People working on Elon Musk's Terafab project are said to be aggressively tapping suppliers for pricing and delivery times for photomasks, substrates, etchers, and more. According to Bloomberg, his people have reportedly talked with Applied Materials Inc., Tokyo Electron Ltd., Lam Research Corp., and even chip manufacturing partner Samsung Electronics Co., with one source saying they reached out to a company during a Friday holiday for an estimate to be delivered the following Monday because Musk wants to move at “light speed."

According to the report, representatives for the project have been asking for "speedy" price estimates, while being decidedly coy about specific products they're planning to build. The inquiries show Musk is serious about his dreams of building his own chips, which he started talking about in late 2025. The billionaire founder may be one of the richest people on earth, but Nvidia’s Jensen Huang warns that building a fab is a complex engineering problem that requires more than money to solve. “Building advanced chip manufacturing is extremely hard,” Huang said. “It is not just building the plant, but the engineering, the science, and the artistry of doing what TSMC does for a living is extremely hard.”

Still, this seemingly did not deter Elon, who successfully made electric vehicles mainstream with Tesla and commercialized space flight by building low-cost, reusable orbital rockets through SpaceX. It seems that semiconductor manufacturing is his next big project, especially as he criticized existing chip fabs for not having enough capacity to meet the needs of his companies.

The project officially launched in March 2026, less than five months after he first publicly talked about the idea. Musk injected $20 billion into Terafab to kickstart it, although experts estimate that costs could hit more than $5 trillion. Less than a month after the announcement, Intel said it joined the Terafab project to “help refactor silicon fab technology” and “accelerate Terafab’s aim to produce 1 TW/year of compute.” It’s currently unclear what Intel will do for Terafab, but this tie-in allowed the chipmaker, which was on the verge of collapse just two years ago, to hit its highest market cap in 25 years.

The other companies Terafab reached out to all similarly experienced uplifts in stock prices, with Tokyo Electron closing at +5.3% in Tokyo, while Applied Materials and Lam Research were up 2% in pre-market trading, despite no fixed orders being placed by the startup just yet. We also do not expect the company to start churning out chips in the next couple of years. “It takes two to three years to build a new plant — no shortcut — and it takes another one or two years to ramp it up,” TSMC CEO C.C. Wei said during an earnings call. “There are no shortcuts.”

Elon Musk on Wednesday showcased an image of one of the first samples of Tesla's AI5 hardware that will be used to drive AI applications in Tesla's cars, Optimus robots, and potentially xAI data centers. The AI5 processor is about half of the reticle size, uses industry-standard memory, and yet can be up to 40X faster than AI4 in certain scenarios, according to Elon Musk.

"Congrats to the Tesla_AI chip design team on taping out AI5," Elon Musk wrote in an X post. "AI6, Dojo 3 and other exciting chips in [the works]. […] And thank you to @TaiwanSemi_TSC and Samsung for your support in bringing this chip to production! It will be one of most produced AI chips ever."

The Tesla AI5 processor module features a fairly small ASIC die (about half the reticle size, according to Musk's previous comments) surrounded by 12 memory packages from SK hynix (most likely GDDR6/7). The module uses an organic substrate, and the memory packages are marked like industry-standard DRAM products. While we do not know how wide AI5's memory interface is, 12 memory packages clearly indicate that we are dealing with a fairly wide memory I/O. If we are indeed dealing with 12 GDDR6/7 memory ICs, then the Tesla AI5 ASIC has a 384-bit memory interface. Depending on the memory type used, the Tesla AI5 can offer memory bandwidth between 768 GB/s and 1.536 GB/s. Exact performance of the AI5 has not been disclosed, though Musk claims significant — up to 40X — improvements over AI5 in select cases.

"I think the Tesla chip team is really designing an incredible chip here: by some metrics the AI5 chip will be 40 times better than the AI4 chip," Elon Musk said during Tesla's Q3 2025 earnings call. "As a result of [outdated hardware] deletions, we can actually fit AI5 [on a] half [of a] reticle with good margin for the traces from the memory to the Tesla trip accelerators, the Arm CPU cores, and PCIe blocks."

Although Musk claims that the AI5 has just been 'taped out' (which means that the final chip design has been sent to a photomask house), he actually shows an already fabricated processor with a 'KR 2613' marking on it, which suggests that the ASIC was packaged on the 13^th week of 2026. Musk also mentions Taiwan Semiconductor (TSC) and Samsung for bringing the chip to production, though we are not sure that the producer of passive components has anything to do with bringing the AI5 processor to production. More likely, Musk meant Taiwan Semiconductor Manufacturing Co., better known as TSMC.

Previously, the head of Tesla, SpaceX, and xAI said that the AI5 would be made by both TSMC and Samsung Foundry, though we do not know which contract chipmaker fabbed the current sample. Assuming that Tesla got the chip in March or early April and no re-spin is required, it is reasonable to expect the company to deploy the processor sometimes in 2027.

Perhaps the most intriguing part of the announcement is that Tesla has apparently not given up on the Dojo system-on-wafer (SoW) processor for AI training, and the Dojo 3 processor is in the works. It was reported last August that the Dojo wafer-level processor initiative had been abandoned and the team behind it dismantled. Indeed, Peter Bannon, the head of the Dojo project at Tesla, retired last August, according to his LinkedIn page. Elon Musk said in July that the AI6 and Dojo 3 could feature a converged architecture (a converged ISA, we would speculate), which would enable the company to unify its software stack and could potentially allow the company to unify its hardware stack as well.

"I think about Dojo 3 and the AI6 as the first [converged architecture designs]," Musk said in a July 23 earnings call (via Investing.com). "It seems like intuitively, we want to try to find convergence there where it is basically the same chip that is used where we use, say, two of them in a car or an Optimus and maybe a larger number on a on a [server] board, a kind of 5 - 12 twelve on a board or something like that. […] That sort of seems like intuitively the sensible way to go."

In an unexpected turn of events, Intel on Tuesday said that it had joined Elon Musk's TeraFab project. The announcement mentions Intel's ability to develop, produce, and package advanced processors in high volumes, which could help Tesla, SpaceX, and xAI to get enough compute performance for next-generation AI and robotics applications. However, the announcement made in an X post you can expand below does not reveal how exactly Intel will help TeraFab.

"Intel is proud to join the Terafab project with SpaceX, xAI, and Tesla to help refactor silicon fab technology," a statement by Intel reads. "Our ability to design, fabricate, and package ultra-high-performance chips at scale will help accelerate Terafab's aim to produce 1 TW/year of compute to power future advances in AI and robotics. It was fun hosting Elon Musk at Intel this past weekend!"

The announcement is not accompanied by any press releases or SEC filings, which raises questions about the framework of the collaboration between Intel and TeraFab, as well as any possible legal bindings. In fact, the post in X is deliberately written in a way that barely reveals any concrete details about the structure of the partnership.

Officially, TeraFab is positioned as the "most epic chip-building effort ever" that is to combine "logic, memory and advanced packaging under one roof," which implies localized production in a massive facility. Furthermore, the company is hiring managers to build a greenfield semiconductor fabrication plant in Texas. By contrast, Intel's wording rather implies a virtual semiconductor production ecosystem, or even a consortium that involves chip design, manufacturing, and packaging at Intel and demand from Tesla, SpaceX, and xAI. How such a consortium would differ from a typical wafer supply agreement that large companies tend to have with their suppliers is something that is unclear at this point.

Considering the fact that Elon Musk wants his TeraFab project to ramp up production of chips as soon as possible, a reasonable way to achieve this would be to build a coordinated supply chain with a capacity pool that includes its own facilities as well as facilities belonging to other chipmakers, such as Intel. If we were to speculate further, we would envision custom co-invested fabs or at least product lines that would use unified process technologies, thus offering Elon Musk's companies dual or even triple sourcing to satisfy their demands.

In fact, Tesla, SpaceX, and xAI may even order Intel to develop custom silicon tailored specifically for their workloads, as Intel officially offers custom silicon development services, though this is speculation.

But while the Intel – TeraFab collaboration announcement lacks details on how Elon Musk plans to produce chips that would consume one terawatt of power on an annual basis, the chief executive of Intel expects Elon Musk to reimagine the entire semiconductor industry.

"Elon has a proven track record of reimagining entire industries," Lip-Bu Tan wrote in his own X post. "This is exactly what is needed in semiconductor manufacturing today. Terafab represents a step change in how silicon logic, memory and packaging will get built in the future. Intel is proud to be a partner and work closely with Elon on this highly strategic project."

Starlink has posted an update on satellite 34343, which it lost communication with on Sunday. The SpaceX-owned global internet firm says that the satellite “experienced an anomaly” while it was in LEO at around 560 km above the Earth. It also used wording to play down any concerns about risk to the thousands of other man-made objects at a similar altitude. However, orbital intelligence agency LeoLabs is less coy and describes Sunday’s incident as a “fragment creation event.”

Rapid Unplanned Disassembly

Following the anomaly on Sunday, Starlink’s official line (as above) was to play down any risks to the International Space Station, Monday’s Transporter-16 mission, or the upcoming launch of NASA’s Artemis II mission. It doesn’t go as far as admitting there is any post-rapid unplanned disassembly debris, but does say that it will “continue to monitor the satellite along with any trackable debris and coordinate with NASA and the U.S. Space Force.”

Naturally, SpaceX and Starlink teams are working to determine the cause of the anomaly and implement any changes necessary to prevent this from happening again. Sadly, the analysis of whatever happened towards the end of last year, when another Starlink satellite tumbled from space after an “anomaly,” didn’t stop this latest debris‑generation incident.

LeoLabs provides some further analysis regarding the fate of satellite 34343. Its radar system “immediately detected tens of objects in the vicinity of the satellite after the event.” Moreover, the independent space‑situational‑awareness (SSA) data provider reckons that the not-an-explosion was “likely caused by an internal energetic source rather than a collision with space debris” or another satellite.

On potential risks to other satellites and missions from the now-ex-satellite, LeoLabs doesn’t highlight any specific dangers. It reckons the fragments from the anomaly will probably de-orbit within a few weeks.

This was indeed a similar Starlink satellite incident to that which occurred last December, think the independent analysts. It goes on to recommend greater clarity to ensure safety in the operating environment.

SpaceX IPO

SpaceX is warming up Wall Street for what could be the largest IPO of all time. It reportedly wants to raise around $75 billion in its offer, which equates to a $1.75 trillion valuation.

It would be better for Elon Musk’s firm if fewer rapid unplanned disassembly incidents happened between now and the IPO, tipped to be this summer.

However, with FCC approval and plans for thousands more Starlink LEO satellites and even talk of a 1 million satellite Orbital Data Center System from SpaceX coming to light, one might assume that any unsolved anomalies become more frequent.

After criticizing leading chipmakers for slow capacity expansion and claiming his companies need 100 – 200 billion AI processors annually, Elon Musk last week unveiled TeraFab — a chipmaker aiming to produce logic chips, HBM4 memory, and advanced packaging under one roof. Backed by an initial ~$20 billion investment, the project targets manufacturing chips consuming 1 terawatt (1 TW) of power per year using leading-edge process technology within the next several years.

But an exhaustive analysis by Tom's Hardware Premium reveals so many factors working against TeraFab, an effort designed primarily to produce chips in-house, that it appears highly unrealistic — at best a step towards partial vertical integration for Tesla, SpaceX, and xAI.

Barriers to entry in the semiconductor industry are so high that launching a new player capable of manufacturing chips in high volumes on leading-edge process technologies is nearly impossible, from both a capital investment and an expertise point of view. All new foundries established in recent decades were either spun off from leading integrated device manufacturers (Intel Foundry, GlobalFoundries, Samsung Foundry), backed by governments (Rapidus, Tata Semiconductor, Hua Hong/HLMC, SMIC), or focused on niche markets (SkyWater, Ayar Labs, Lightmatter). And many of these new players — Intel Foundry, Rapidus, and Tata — have yet to prove that they can be competitive world-class contract semiconductor makers.

TeraFab does not plan to become a foundry; its only purpose is to serve the silicon needs of Elon Musk's companies, including Tesla, SpaceX, and xAI. Yet its need for capital (from $4 to $5 trillion, depending on how you count), equipment, expertise, and a skilled workforce are extremely vast. Meeting the aforementioned needs is quite literally impossible within a realistic timeframe. Here's why.

A question of capital

Money is the most obvious challenge for Elon Musk's chip venture. To build 1 TW of AI silicon per year, Elon Musk's TeraFab will need to process the equivalent of 22.4 million Rubin Ultra GPU wafers per year, 2.716 million Vera CPU wafers per year, and 15.824 million HBM4E wafers per year, according to estimates from premier semiconductor analysis firm Bernstein. To do so, TeraFab will need from 142 to 358 fabs, the report claims.

Bernstein's calculations are based on a top-down conversion of compute demand into semiconductor manufacturing requirements. They start with Musk's goal of 1 TW of annual AI compute and translate it into the number of AI racks needed, using assumptions about Nvidia's rack power (e.g., 120 kW to 600 kW), GPUs per rack, and system architectures similar to Nvidia’s Blackwell and Rubin platforms.

They then convert those systems into chip, wafer, and fab demand using fixed assumptions for die sizes (e.g., ~825 mm² GPUs, ~800 mm² CPUs), HBM configurations, and yields. This is where Bernstein's analysis gets a bit rough: The firm assumes the capacity of a modern fab is 50,000 Wafer Starts Per Month (which is too high for a leading-edge logic fab, and too low for a DRAM fab) and that it costs $35 billion to build (which is not enough for a 50K WSPM logic fab, but may be too high for a DRAM fab). These assumptions increase the estimated costs of the whole project; while the ballpark of several trillion seems to be correct, $5 trillion may be too high.

A modern leading-edge logic fab (or rather, phase of a fab) typically has a production capacity of around 20,000 wafer starts per month (WSPM), so this facility completes roughly 240,000 wafers per year, assuming stable operation and no major yield or downtime losses. Assuming that CPUs and GPUs are made using the same node, then to produce these logic processors (on 25.116 million wafers per year), one would need 105 leading-edge wafer fabs, provided a roughly 100% yield and no downtime.

For context, TSMC shipped 15.023 million 300-mm-equivalent wafers in 2025 — the foundry's biggest year ever — which includes millions of outdated 200mm wafers and 300mm wafers processed on legacy process technologies.

A modern leading-edge 2nm-class logic fab costs roughly $25 billion to $35 billion. And while the economies of scale drive costs down, we are still talking about a $30 billion ballpark per fab, which means about $3.15 trillion for logic fabs alone, assuming there are near 100% yields and no production disruptions.

Keeping in mind that TeraFab will be a new kid on the block, it's unrealistic to expect its yields will be close to 100%; assuming instead an 80% yield, more capacity will be needed, bringing the logic fab number to 126 and the total capacity investment to $3.78 trillion. To put the number into context, TSMC currently operates between 35 and 50 300mm fab modules that have been constructed across several decades.

Memory fabs are cheaper than logic fabs and have higher capacities due to the nature of the DRAM market, but we are still talking about tens of billions of dollars per fab. A modern DRAM fab usually has production capacity between 100,000 and 200,000 WSPM, which means that with a mid-point capacity of 150,000 WSPM, one will need around 9 fabs to produce 15.824 million HBM4E wafers.

That being said, for HBM memory, effective capacity is significantly constrained by yield, stacking, and packaging, not just wafer starts. As a result, while a DRAM fab may process hundreds of thousands of wafers per month, only a fraction of that output can be converted into high-end HBM, which is why memory may become a bottleneck. In any case, with a 70% yield for HBM, we are still talking about at least 12 fabs each costing at least $20 billion, or $240 billion in total.

Bear in mind that the figure covers front-end wafer capacity only. To put this enormous cost into context, the Big Three DRAM makers (Samsung, SK hynix, and Micron) currently operate three dozen DRAM fab modules built since the early 2000s.

2.5D and 3D packaging facilities are fairly expensive, though at $2 - $3.5 billion per phase, clearly cheaper than logic fabs. Yet keeping in mind that TeraFab will need tens, or maybe even hundreds, of advanced packaging facilities to integrate AI processors and assemble HBM stacks, the company will need to invest hundreds of billions in advanced chip packaging.

In total, it looks like TeraFab must invest well north of $4 trillion to meet Elon Musk's goal of producing AI chips that would consume 1 terawatt of power per year, not including land acquisition, development of process technologies, software development, and ecosystem buildout. Yet Bernstein's calculations are even more aggressive as analysts from the company believe that investments in TeraFab will be around $5 trillion.

Raising $5 trillion would be extraordinarily difficult. For context, even the largest companies like Nvidia, Apple, and Alphabet have market capitalizations of $4.34 trillion, $3.71 trillion, and $3.5 trillion at the time of writing, so Musk would need to mobilize capital exceeding the value of the world's most valuable corporations. It's hard to imagine private fundraising, a consortium, or even a sovereign deal of this scale.

Perhaps the only way for Elon Musk to fund this initiative is to apply at once for multi-government backing, sovereign wealth funds, and hyperscalers, as well as seeking support from capital markets. While an application for government support, per se, does not hurt, it is extremely unlikely that he will get such funding. After all, the onshoring trend in the semiconductor industry limits to one the number of governments likely willing to invest in TeraFab. Yet even the U.S. government will find it hard to invest $5 trillion, given the country's annual budget of around $7 trillion.

Equipment and raw materials supply chain

At a scale of $5 trillion in the semiconductor industry within a foreseeable timeframe, constraints would extend well beyond capital and would include limited availability of equipment, construction materials, raw materials, and a sufficiently large, skilled workforce to build, operate, and maintain TeraFab's futuristic fabs.

A modern 3nm-class logic fab with a capacity of 20,000–30,000 WSPM requires 80 – 100 DUV + EUV lithography scanners, hundreds of baking and developing tools, hundreds of etching tools, hundreds of deposition tools, and over 100 metrology and inspection tools, as well as hundreds of other tools that process wafers.

In addition, a fab uses thousands of various utility subsystems (pumps, generators, chemical delivery systems, specialty gas delivery systems, etc.) that make things happen. Exact fab configurations are unknown, and many tools are clustered with multiple process chambers, so the tool count understates the number of actual processing modules. DRAM fabs use fewer tools because it is easier to make memory than logic. Nonetheless, we are still talking about thousands of litho, deposition, metrology, and inspection tools per fab.

Since leading-edge logic process technologies are particularly lithography-intensive (even though some EUV multi-patterning sequences may be substituted by machines like Applied Materials' Centura Sculpta), let's assume that a TeraFab logic fab will need 100 DUV + EUV lithography systems, which means that 126 of these fabs will need 12,600 lithography tools for logic. For context, ASML shipped 48 EUV and 131 ArFi DUV scanners in 2025 (for a total of 179 fabs), up from 44 EUV and 129 immersion DUV machines (173 in total) a year before.

As a result, it will take ASML 70 years at its current production rate to equip TeraFab with lithography scanners for logic production alone (not counting scanners for DRAM manufacturing), and that's only if it exclusively supplies them to Musk's company.

ASML has been gradually increasing its output of EUV and ArFi DUV scanners for some time, as these machines are exclusively used for advanced nodes by companies like TSMC. That being said, ASML's production capacity depends not only on its own production capacity, but also on the production capacity of its suppliers, as the company integrates tens or even hundreds of thousands of components into every scanner. Increasing TSMC's output meaningfully is hard, but it is even harder to increase the output of all its suppliers. Getting 12,600 lithography tools in a short amount of time is quite literally impossible.

Also, keep in mind that ASML currently employs 44,000 people. If it needs to assemble 70X more litho systems (assuming it gets enough components), it will probably need to increase its headcount to match the scale of a Foxconn or Walmart, rather than a semiconductor tool company.

The same applies to other suppliers of wafer fabrication equipment: They can produce a limited number of tools, and their suppliers can make them a limited number of components. Therefore, getting millions of process chambers in a few years is simply impossible.

Finally, getting enough raw materials of perfect purity required for leading-edge chip production for a venture that is larger than Intel, Samsung, and TSMC combined (and we're not even talking about memory here) will be problematic, as they will have to expand their supply chains as well. Still, it should be easier than scaling production of lithography tools.

Time is not on their side

Now that we've mentioned capital and supply-chain challenges for a semiconductor venture of Terafab's scale, it's time to talk about the thing that has driven multiple chipmakers out of business in recent decades: leading-edge process technologies.

Developing a modern, leading-edge fabrication technology requires billions of dollars and a lot of time, and while Elon Musk tends to raise enough money for his projects, time is something money cannot buy.

Development of a new leading-edge process technology is a 5+ year effort that begins with pathfinding, materials research, and transistor architecture exploration. Once the transistor architecture is figured out, engineers run countless simulations to model key physical effects such as doping profiles, strain engineering, and leakage behavior to tune these characteristics in a bid to achieve their design specifications for the whole node. This is arguably the only step in process technology development that can be licensed. For example, Rapidus licensed a 2nm GAA transistor design from IBM. Imec and CEA-Leti can also license some of their transistor-related technologies, but that's about it.

Once the transistor concept is finalized (or licensed), the real work begins: Engineers must construct hundreds of tightly interdependent process steps across FEOL, MOL, and BEOL modules. These steps cover everything from transistor formation to interconnect and metallization, as well as require atomic-scale precision in deposition, etch, lithography, and annealing. Every stage involves hundreds, or even thousands, of tunable parameters, all of which must be optimized for yield, performance, power efficiency, defectivity, and long-term reliability — a process that depends heavily on accumulated expertise, rather than licensable IP.

After individual steps are stabilized, integration becomes the primary challenge. Engineers combine modules — such as gate stacks and source/drain structures — into a logical process flow and tune sequencing and thermal budgets to avoid contamination and material degradation. On paper, this sounds like an easy task, but this integration phase effectively defines the node; it must be done in a development fab, and it cannot be outsourced or licensed.

Once device performance and yield targets are achieved in the development fab, the process must be made usable for chip designers through PDKs, SPICE models, and validated standard-cell libraries. All of these take hundreds or thousands of engineers and a lot of time.

Finally, the process technology must be transferred to a high-volume manufacturing fab, which introduces another layer of complexity. Achieving stable, high yields in a production environment is a long, iterative process that requires experienced engineering teams and continuous refinement. Even with abundant funding, this stage cannot be accelerated easily.

As a result, the key question remains whether a company that starts its semiconductor efforts from scratch can realistically complete this entire cycle — from concept to mass production — within five years. Rapidus will demonstrate whether it is possible in 2027, when it intends to start trial production of chips on its 2nm-class fabrication process.

It will be the 2030s before TeraFab can actually output chips using its own manufacturing technologies. Theoretically, if Tesla, SpaceX, and xAI have limitless demand for AI processors, TeraFab could potentially license process technologies from Tesla's foundry partners, though it remains to be seen whether production nodes can indeed be licensed and integrated in a reasonable amount of time into an existing fab.

The workforce shortfall

To meet Elon Musk's 1 TW of compute per year goal, TeraFab must operate over 150 fabs (well, fab modules, or phases) and plenty of advanced packaging facilities. These fabs and facilities must be built by people, and as TSMC discovered with its Fab 21 phase 1 in Arizona, qualified construction workers are hard to find. Finding people who will run these fabs is even harder.

A leading-edge fab employs between 4,000 and 7,000 construction workers on site at peak, depending on the scale. When we talk about the full build cycle, there are usually 10,000 or more workers involved; for example, TSMC expects 40,000 construction jobs to be created as a result of its expansion in Arizona. To complete Fab 21 phase 1, the company had to send 500 additional workers from Taiwan, perhaps because local workers were unfamiliar with TSMC's procedures.

The 150+ fabs required by TeraFab will necessitate hundreds of thousands of construction workers, which will inevitably create a labor bottleneck, especially for highly specialized workers required for cleanroom and sub-fab systems.

Once the fabs are built, they will need employees with very specific skills. All leading-edge fabs are highly automated manufacturing facilities, but they still employ thousands of people to manage, serve, and maintain them. TSMC's 20,000 WSPM Fab 21 phase 1 currently employs around 3,000 people (which includes plenty of management roles that will not be required for subsequent phases), whereas Intel's 40,000 WSPM Fab 52 has created 3,000 high-tech manufacturing jobs and 3,000 tool technician jobs in the area, along with thousands of indirect jobs.

Even assuming that next-generation advanced fab modules will require just 1,500 employees, Elon Musk's venture will need over 300,000 highly skilled people. To put the number into context, TSMC had 83,825 full-time employees serving in various capacities as of December 31, 2024. Where TeraFab can find 300,000, and whether this can be done at all, is hard to fathom.

Reality check

Elon Musk's TeraFab aims to produce AI logic chips and HBM memory, consuming 1 TW of power per year, which requires trillions of dollars and hundreds of fabs, which is far beyond current industry capacity in terms of capital, supply-chain capabilities, and skilled workforce availability.

Beyond capital, equipment constraints are severe, as ~100 fabs would require 12,600 lithography tools, while ASML shipped only 179 scanners in 2025, and there is no way it can scale up production within a reasonable timeframe.

Process technology development remains a 5+ year effort that involves hundreds of tightly integrated steps, extensive simulations, and yield optimization that cannot be licensed or accelerated easily, even with access to partners like IBM or imec.

Finally, TeraFab would require hundreds of thousands of construction workers and over 300,000 skilled employees.

Given all the capital and supply-chain limits, the project in its current form looks quite unrealistic at full scale. Yet if this is an element of partial vertical integration that will be used to make some of the chips that Tesla, SpaceX, and xAI require in-house, then why not? Perhaps Musk's real goal is far less ambitious: success for his other ventures, rather than wholesale transformation of the entire global semiconductor market.

British Army veteran Jon L. Noble has shared a heartwarming update on his first 100 days with a Neuralink brain computer interface (BCI) implant. Noble variously describes the journey from day 0 to the present as “science fiction… magic… brilliant… addictive… overwhelming and incredibly motivating.” Along the way, he’s moved from Mac newbie to power user. As for gaming, “I’m now raiding, and exploring Azeroth hands-free at full speed — no mouse, no keyboard, just intention,” enthuses the World of Warcraft fan, also known as P-18 (patient number 18).

For some background to Noble’s situation, the Financial Express reports that the ex-paratrooper was paralyzed from the shoulders down after a driving accident in 2016. He volunteered for Neuralink clinical trials and got the Neuralink N1 implant in London in December last year.

Noble’s first 100 days as an N1 implant patient have whizzed by, and he starts his recollective Tweet by summing up, “Looking back, the whole journey feels like science fiction that somehow became my everyday reality.”

On day zero, he went in for surgery, with a robotic system inserting 1,024 threads into his motor cortex. He was well enough - “alert and in good spirits” - to go home the next day. By day seven, the scar was already fading, and Noble says he “felt sharper and more positive than I had been in years.”

The fun started in week two, when the N1 was paired with a new Apple MacBook, says the ex-paratrooper. Neuralink engineers helped him get used to flexing his new BCI, and by week three, Noble says “scrolling, clicking, typing — all mind-controlled,” was second nature on the Mac. “I went from total Mac newbie to power-user faster than I ever expected,” he joked.

Riding into the realms of Azeroth

There’s a bit of a gap in the timeline shared, but by day 80, Patient 18 recalls he was “ready for the big leagues.” Of course, gaming presents quite a different experience to general computer interaction, with the stress on timing, accuracy, and not forgetting strategy. Noble admits he started off feeling clunky.

“Once my brain and the BCI synced, it was pure magic,” explained the ex-paratrooper. “I’m now raiding, and exploring Azeroth hands-free at full speed — no mouse, no keyboard, just intention. It’s honestly brilliant. The freedom is addictive.” You can see a video of Noble playing the game if you expand the embedded post above.

Noble also takes the opportunity to thank all the positive folks he’s had the pleasure to interact with on social media since his implant. It is good to hear of the overwhelming positivity and excitement communicated in the thousands of messages he has received.

With these first 100 days behind him, Noble relishes what the next 100 will bring. “The N1 didn’t just give me a new way to use a computer — it gave me a new way to live,” seems like a good summary of the life-changing experience gained from a capable BCI.

Although the $20 billion funds injected in Elon Musk's TeraFab project — which is supposed to build logic and memory chips as well as package them under one roof — is barely enough to build a 7nm-class logic fab, Elon Musk's eventual ambitions include producing millions or billions of AI chips that consume 1 terawatt (1 TW) of power per year. This ambition by far exceeds today's industry capacity, and if Musk pursues it, he will need $5 trillion, according to Bernstein, a premier semiconductor analysis firm (via @Jukan05). Interestingly, the order of the sum is similar to what Sam Altman was seeking for his failed fab network a couple of years ago.

To build 1 TW of AI silicon per year, Elon Musk's TeraFab would need to process 22.4 million Rubin Ultra GPU wafers, 2.716 million Vera CPU wafers, and 15.824 million HBM4E wafers annually using from 142 to 358 fabs, according to Bernstein.

The firm gets these figures, which it describes as "a very rough back-of-the-envelope wafer capacity calculation," by using a top-down approach, translating rack-level power demand into required semiconductor manufacturing capacity. Using power consumptions of rack-scale systems (120 kW for Rubin to 600 kW for Rubin Ultra), analysts convert system volumes into chip counts and then into wafer demand using their die sizes, such as ~825 mm² for GPU dies, ~800 mm² for CPU dies, the number of HBM stacks, and yields.

But Bernstein seems to overstate the typical capacity of logic fabs (50,000 wafer starts per month, WSPM, instead of 20,000 WSPM), understates the capacity of DRAM fabs (50,000 WSPM instead of 100,000 – 200,000 WSPM), and assumes prices per fab at $35 million, which likely inflates total estimates even if the multi-trillion-dollar magnitude is generally correct.

Trillions for fabs and packaging facilities

Based on what we know about the modern semiconductor industry, a modern leading-edge logic fab typically delivers around 20,000 WSPM, or roughly 240,000 wafers per year. To produce 25.116 million logic wafers annually, TeraFab would require about 105 fabs at perfect yields, or 126 fabs at 80% yields. A 2nm-class capable fab costs from $25 billion to $35 billion (~$30 billion midpoint), so logic capacity alone would require around $3.15 trillion, assuming a 100% yield and $3.78 billion at 80% yield.

For context, TSMC shipped 15.023 million 300-mm-equivalent wafers in 2025, which includes 200-mm wafers and 300-mm wafers made on outdated process technologies. Also important, TSMC currently operates about 50 300-mm fab modules built over two decades.

Large-scale high-bandwidth memory (HBM) production is also crucially important for achieving Elon Musk's goals for TeraFab. Modern DRAM fabs — run by Micron, Samsung, and SK hynix — typically offer 100,000 to 200,000 WSPM (so, let us take 150,000 WSPM as the midpoint). Producing 15.824 million HBM4E wafers would require about 9 fabs at 100% yield, or ~12 fabs at 70% yield. Each of these fabs costs at least $20 billion, or roughly $240 billion for front-end memory capacity alone. However, HBM output is constrained by stacking and packaging capabilities and yields, not only by the output of DRAM devices. For comparison, the three major DRAM makers currently operate only ~30 fab modules built since the early 2000s.

Advanced packaging facilities used for 2.5D and 3D integration, as well as HBM assembly, cost around $2 billion to $3.5 billion per phase, and TeraFab would require tens or even hundreds of such facilities to assemble AI processors and HBM stacks, which means hundreds of billions of dollars in additional investment.

Altogether, TeraFab would require well north of $4 trillion, which generally aligns with Bernstein's $5 trillion estimate, excluding land, process R&D, software, and ecosystem development.

Constraints beyond money

Raising $5 trillion would be extraordinarily difficult. For context, companies like Nvidia, Apple, and Alphabet have market capitalizations of $4.34 trillion, $3.71 trillion, and $3.5 trillion, respectively, so Musk would need to mobilize capital exceeding the value of the world's most valuable corporations. It is hard to imagine a private fundraising round, consortium, or even sovereign funding of this magnitude. For example, even if the U.S. would like to fund Musk's semiconductor venture, it could not do this that easily, as its budget for this year is about $7 trillion.

The only conceivable path would involve multi-government backing, sovereign wealth funds, hyperscalers, and capital markets acting in concert. However, we doubt this is possible at all. Furthermore, at a scale of $5 trillion deployed within a foreseeable timeframe, constraints would extend beyond capital and would include limited availability of wafer fabrication equipment, construction materials, and a sufficiently large and skilled workforce to build, operate, and maintain such fabs.

Then again, does Musk really plan to build a foundry that would leave behind TSMC, Samsung, and Intel combined just to make enough chips for Tesla, SpaceX, and xAI? Well, this is an open question.

Russia has at last begun to deliver on its plans to establish a domestic state-funded rival to Elon Musk’s Starlink, reports The Moscow Times. The launch of the first 16 satellites, said to form the foundation of a constellation of 900 by 2035, was supposed to have happened in Q4 last year. The so-called Rassvet system aims to expand to 250 LEO satellites next year, when it will become a domestic commercial alternative to Starlink.

A private aerospace outfit called Bureau 1440 appears to be the key tech partner of the government for this state venture. Scientists/engineers from this company are set to complete system checks on the newly launched 16 orbiters. When checks are finished, they will be moved into their target orbit positions.

So, 16 out of 900 might sound like a drop in the ocean of space, but this first step was probably one of the most difficult. Alexei Shelobkov, CEO of Bureau 1440’s parent company, ICS Holding, said that Rassvet’s deployment is going to see dozens more launches. A quick prod of the calculator suggests that just 15 more launches (with batches of 16 satellites) will be required to hit the 250 constellation target for sometime in 2027.

Did Starlink's new whitelist-only policy accelerate the rollout of Rassvet?

The Russian government has reportedly set aside the equivalent of $1.26b to help develop Rassvet. If you think it is good to see the Russian state investing in non-military infrastructure, remember that it coincidentally lost Starlink access only last month. That’s when SpaceX implemented its new whitelist-only policy to replace the previously ineffectual measures that were in place. Surely that would have put pressure on Rassvet development teams to get on with it.

Clearly, Rassvet, even at its fully fledged 900 satellite target, is going to be dwarfed by efforts from other countries, or groups of countries such as the EU. The U.S. is home to two of the biggest satellite internet firms: the aforementioned Starlink, with roughly 10,000 already in orbit, and a next-gen target beyond 30,000; plus Amazon Leo (the rebranded Project Kuiper) has over 200 satellites launched, but is targeting over 3,200.

Tesla and SpaceX CEO, Elon Musk, announced Saturday night that his TeraFab semiconductor project will be built on the Tesla campus in eastern Travis County, Austin, Texas, as a joint venture between the two companies.

In a livestream broadcast via X, Musk stated that the facility exists because the global chip industry cannot expand quickly enough to meet his projected demand across AI, robotics, and space computing. "That rate is much less than we'd like," Musk said from the defunct Seaholm Power Plant in downtown Austin. "We either build the TeraFab, or we don't have the chips, and we need the chips, so we build the TeraFab." The project reportedly carries a $20 billion price tag.

The Austin fab will house equipment for logic, memory, packaging, testing, and lithography mask production in a single building. Musk claimed that capability does not exist at any other facility in the world, and that having everything under one roof enables a rapid iteration loop: make a chip, test it, revise the mask, and repeat without shipping wafers between sites.

The facility is expected to produce two types of chips. One will be optimized for edge inference, primarily for Tesla's vehicles and Optimus humanoid robots. The other will be a higher-power chip hardened for the space environment, which Musk says will run hotter than “terrestrial” designs to minimize radiator mass on satellites.

Musk compared the project to the current global output of global AI compute, which he estimated at roughly 20 gigawatts per year. That figure, he said, represents about 2% of his companies’ eventual needs. On the terrestrial side, he projected 100 to 200 gigawatts per year of chip output; the remainder, up to a terawatt, would go to space-based AI compute aboard solar-powered satellites that SpaceX has already petitioned the FCC to launch.

“That's why I think it's probably a hundred to two hundred gigawatts a year of terrestrial chips, and probably on the order of a terawatt of chips in space," noted Musk. "Just because of power constraints on the ground.”

Musk said Tesla, SpaceX, and xAI — which SpaceX acquired in February — will continue buying chips from existing suppliers, including TSMC, Samsung, and Micron, adding that he would like them “to expand as quickly as they can.” He gave no timeline for when the TeraFab would begin producing chips or reach its target output, and while he has previously referenced 2nm as the target process node, he didn’t repeat that figure in the broadcast.

Elon Musk spent quite some time last fall complaining that existing foundries cannot meet his company's demand for high-performance AI processors and proposed an idea to build his own chipmaking venture. Apparently, this was not just a brag but rather an announcement of a long-term project. Now the project has gotten its launch date: March 21, 2026.

"Terafab Project launches in 7 days," Elon Musk wrote in an X post.

He did not elaborate on any details about the project, though his previous comments indicated that this is indeed a long-lasting semiconductor production facility project that would enable his companies — Tesla, SpaceX, and xAI — to get enough supply of AI accelerators.

Musk once mentioned that his companies might need 100 – 200 billion AI chips per year, and if it cannot get them from existing foundry partners, then the company will consider building its own fabs. Apparently, the Terafab Project seems to be the brand depicting the endeavor and scale, though it does not provide any reasonable portrayal of the nature of the project.

Speaking in an interview with Moonshots, Elon Musk argued that the semiconductor industry may be approaching cleanroom design incorrectly. Instead of keeping entire buildings ultra-clean, Musk suggested that fabs should focus on isolating silicon wafers themselves throughout the manufacturing flow, keeping them sealed from the surrounding environment at all times. He surmised that would allow him to eat cheesburgers in the cleanroom while chips were being made.

Rebuilding the whole supply chain for such fabs would take the industry a couple of decades, to say the least. For this, Musk argued that his planning horizon is closer to one to two years, and he rarely looks beyond three years, which makes the traditional semiconductor buildout cycle incompatible with his projected demand.

He added back then that if foundries could accelerate expansion and supply 100 billion to 200 billion AI chips per year within Tesla’s required timeframe, the company would gladly rely on external manufacturing instead of pursuing its own facilities.

Apparently, we are going to see details about the project in a week. The again who launces a multi-billion project on Saturday? This is what we are going to see next Saturday!

China could overtake the U.S. in brain computer interface (BCI) technology leadership in the coming months/years, thanks to a fortunate mix of government support and investor enthusiasm. In a recent interview with the Financial Times (FT), Tiger Tao, the founder of Shanghai-based NeuroXess, highlighted the rapid progress of the firm’s BCI technology. NeuroXess (no relation to Intel XeSS) was set up in 2021 and has already reported some successful human BCI trials.

The FT report comes less than six months after we covered news of China’s plans to outpace Neuralink with a state-backed BCI blitz, to coin a phrase.

At that time, a sweeping government policy document came into effect, with a fast, aggressive roadmap. It sought to coordinate and combine China’s huge resources and oil the wheels of progress by streamlining planning, regulatory approval, and financing. At the time of writing, there have already been 10 invasive BCI trial programs in China. The hope was/is to produce two to three ‘world-class’ BCI companies by 2030, and it looks like NeuroXess could be one of them.

As for NeuroXess’ success, it seems to have been rapid. As mentioned in the intro, it was only founded in 2021. Now just half a decade old, it has recently boasted of using its BCI tech to allow a paralyzed patient to control a computer cursor. Moreover, the patient was using their BCI for computing tasks just five days after the implant operation.

NeuroXess technology

NeuroXess trials have been using invasive BCI tech, and partly because of this, the focus has been on areas of strong medical need – like patients with paralysis or amyotrophic lateral sclerosis (ALS). No one without a strong medical need would be interested in a brain operation, and such a device being implanted.

The NeuroXess BCI uses a polyimide and metal mesh, but it sits on the patient’s brain and doesn’t pierce any brain tissue. This contrasts with Elon Musk’s Neuralink, which uses an implant bristling with microscopic threads to capture neural signals from within the brain. There have been concerns about electrodes going into brain tissue, causing scarring and thus the degradation of brain signal readings over time. Neuralink denies this is an issue, with its super-thin electrodes, butNeuroXess sidesteps the issue altogether.

Comparing Neuralink and NeuroXess in performance terms, the latest performance data shared by the FT suggests the former has achieved brain links at 10 bps in trials, and the Chinese tech is capable of 5.2 bps. You can see the NeuroXess speeds confirmed in the video linked in the intro.

While the race for the best invasive implant BCI continues, a BCI expert that the FT talked to noted that firms are using the latest knowledge from this frontier to the benefit of non-invasive systems. It is hoped that the advances could eventually improve non-invasive BCIs so much that operations/implants become minor or unnecessary, in general.

This optimization work is expected to be easier in China, with a virtuous circle coming into play: more data, lower costs, resulting in more users, and more data.

SpaceX has officially announced its acquisition of xAI, allowing the two companies to vertically integrate their operations and help Elon Musk achieve his dream of artificial intelligence in space. According to the company’s announcement, space is the only logical solution to scaling AI data centers, as we do not have enough resources on Earth to power these systems.

“Current advances in AI are dependent on large terrestrial data centers, which require immense amounts of power and cooling. Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment,” the company said in its statement. “In the long term, space-based AI is obviously the only way to scale. To harness even a millionth of our Sun’s energy would require over a million times more energy than our civilization currently uses!”

The company has already begun taking the first steps to achieving this dream with its latest FCC filing mentioning plans to launch a million satellites into orbit. These orbital data centers would directly harness the power of the sun without interference from the Earth’s atmosphere or rotation, allowing it to run more efficiently compared to terrestrial infrastructure.

This isn’t a small project, either. Musk says that “launching a million tons per year of satellites generating 100 kW of compute power per ton would add 100 gigawatts of AI compute capacity annually, with no ongoing operational or maintenance needs.” He even mentioned launching up to 1TW/year, which would make this orbital data center the most powerful one operated by an AI tech company.

Although launching satellites into space is quite an expensive and resource-intensive endeavor, Musk claims that the efficiency of these data centers would make them “the lowest cost way to generate AI compute.” This is made possible by SpaceX’s advancements with the reusable Starship rocket, which will also be launching the newer, much bigger V3 Starlink satellites this year. He also mentioned his plans of using the platform to build a manufacturing base on the moon and use it to launch up to 1,000TW/year into deep space and help humanity become a Kardashev Type II civilization.

Despite Musk’s massive financial resources, his dream still faces some challenges, which is why Nvidia CEO Jensen Huang doubts whether this project will work. For one, electronics like advanced AI chips are susceptible to cosmic radiation, corrupting data and frying circuits. There’s also the question of cooling, as the usual solutions that work on Earth’s surface aren’t applicable in space, instead relying on the vacuum of space to serve as an "infinite heatsink." And last, but not least, putting so many satellites in orbit around the Earth risks a Kessler Syndrome event, which would throw enough space junk in orbit to make launching anything — from satellites to crewed deep-space missions — an utter impossibility for the next couple of hundred years.

A SpaceX FCC filing said that it plans to put a million satellites in orbit to build an Orbital Data Center system. The company said in the document that these will support AI, machine learning, and edge computing applications, taking advantage of the sun's energy without interference from the Earth’s atmosphere.

“Launching a constellation of a million satellites that operate as orbital data centers is a first step towards becoming a Kardashev II-level civilization — one that can harness the Sun’s full power — while supporting AI-driven application for billions of people today and ensuring humanity’s multi-planetary future amongst the stars,” the company wrote in its filing.

The filing went on to explain, “To deliver the compute capacity required for large-scale AI inference and data center applications serving billions of users globally, SpaceX aims to deploy a system of up to one million satellites to operate within narrow orbiting shells spanning up to 50 km (over 31 miles) each (leaving sufficient room to deconflict against other systems with comparable ambitions). This system will operate between 500 km and 2,000 km (310 miles and nearly 1,250 miles) altitude and 30 degrees and sun-synchronous orbit inclinations.”

SpaceX claimed that a million tonnes of satellites generating 100kW of compute per tonne would deliver 100 gigawatts of AI compute capacity without all the limitations of ground-based deployments, making orbiting data centers far more cost-efficient than their terrestrial counterparts.

The Kardashev scale measures the advancement of a particular civilization based on how it harvests energy. A Type I civilization uses all available energy on its own planet, which barely puts humanity and its current technology just below this level. On the other hand, a Type II civilization directly harvests energy from its nearby star, while Type III captures all the energy produced inside its galaxy.

The risk of Kessler Syndrome

While Elon Musk's plans to launch a million satellites into orbit come into view, a former Russian geostationary satellite has reportedly broken up in space. According to Space.com, the Luch/Olympic satellite, which the Russians use to observe other satellites in orbit, has recently been decommissioned and brought up to a graveyard orbit above its former geostationary altitude of more than 35,000 km or nearly 22,000 miles.

However, ground observers noticed the unit has fragmented, likely due to an external impact (see time-lapse video, embedded above). This incident produced more debris that is now orbiting the earth, which could collide with other satellites, further exacerbating the space junk problem.

Many experts are concerned about an event wherein multiple space collisions would produce so much debris that it would make it impossible to launch satellites or even keep them operating in orbit. SpaceX’s current fleet of 9,000 satellites already has experts concerned, especially as its competitors are also considering launching their own constellations.

Musk’s plan to launch a million satellites is likely a nightmare scenario for many scientists, as this would put the risk of a Kessler Syndrome event several magnitudes more plausible. Moreover, under such a cascade of space debris, humanity could effectively become trapped on Earth for generations, dashing the billionaire’s dream of landing astronauts on Mars.