Elon Musk has announced the construction of Terafab, a $25 billion chip manufacturing facility aimed at challenging NVIDIA's dominance in the AI chip market. The facility will produce 2-nanometer chips, with the first product, the Tesla AI5, expected to rival NVIDIA's H100 in performance while offering significantly lower inference costs. Sampling is set for late 2026, with mass production targeted for 2027. Terafab's ambitious goal is to achieve an annual capacity of 1 terawatt of AI computing power, with 80% of the chips destined for space deployment via SpaceX's Starlink satellites. This move aims to circumvent Earth's power grid limitations and leverage space's superior solar radiation and heat dissipation capabilities. The announcement has sent ripples through the industry, as Musk's vertical integration strategy could disrupt NVIDIA's current monopoly and reshape the AI computing landscape.