Tesla Inc. (NASDAQ:TSLA) and SpaceX CEO Elon Musk shared fresh details about the upcoming Terafab AI chip project, touting it as a major leap in his enterprises’ AI capabilities.

Terafab Invites Doubts

On Sunday, user @markusdd5 posted on X that the Terafab project, given its scale, could be unsuccessful. “I assign a major probability to this either failing or delaying much beyond the intended timeline,” the user said in the post.

He went on to explain that chip production is a complex process and is the “farthest humanity has ventured down the tech tree,” adding that he shared this opinion not to root against Musk, but to “manage expectations.”

Elon Musk Weighs In

Responding to the user, Musk remained bullish and optimistic about the Terafab goal, sharing that while several companies have successfully produced chips, “no companies have ever made fully reusable rockets or achieved SpaceX scale,” he said.

The billionaire then went on to say that the project will comprise two separate fabs, each tasked with “making only one chip design,” which would simplify the process and would facilitate “linear” movement of the Front-Opening Unified Pod (FOUP).

An FOUP is a container that securely and safely carries silicon wafers in a controlled environment during the chip manufacturing process. It is a crucial element of the process and allows automated machines to access the chips during the process.

“A super high production rate allows us to test very quickly what steps can be deleted, simplified or sped up, even after the design is fixed,” he said, adding that current chip fabs relied heavily on “historical heuristics,” which were incorrect in some instances.

“Anything that is a rate limiter at the machine level means that machine will be redesigned, unless already at limit of physics,” Musk shared, while also mentioning that new designs could be researched and produced in labs within less than a week, which would enable “high risk, high return ideas.”

Musk then stressed the need for Terafab, which would help his enterprises reach “extreme” production scale. “Either we make Terafab or we will be stuck at the ~20% chip/memory output growth per year of the current industry,” he said.

Tesla’s Terafab Project, Elon Musk’s AI Ambitions

Musk, over the weekend, unveiled the Terafab project, which is a joint venture between Tesla and SpaceX. With the project, Musk has aimed at chip manufacturing processes that would see space and AI applications. The Terafab would consolidate all stages of chip development and production, including testing and packaging of the chips.

The billionaire had earlier shared that his enterprises would surpass their rivals in AI development, while also sharing that SpaceX would win the AI race in space. Musk has ramped up efforts for developing AI chips, with Tesla also reportedly hiring AI chip designers in South Korea.

According to Benzinga Edge Rankings, Tesla scores well on the Momentum metric and also offers a favorable price trend in the Long term.

Price Action: TSLA slid 3.24% to $367.96 at market close on Friday, but gained 1.17% to $372.25 during the after-hours session.

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