Tesla and SpaceX Announce $16.8B ‘Terafab’ Chip Megafactory in Texas

In a bold move unprecedented in the semiconductor industry, Tesla and SpaceX have officially announced their plans to construct a joint chip manufacturing complex. Named Terafab, this megafactory will be located in Grimes County, Texas, just north of Houston, with an initial investment of $16.8 billion.

CEO Elon Musk has described the proposed facility as “the largest and most valuable building on Earth by far.” SpaceX has confirmed that the complex will span over 100 million square feet. This is more than ten times the floor space of TSMC’s largest existing gigafabs. The facility is projected to employ at least 3,000 people from Grimes and the neighboring Brazos County.

As per SpaceX, Terafab will be home to the manufacturing, packaging, and testing of advanced logic and memory devices. The chips produced here will be optimized for edge computing and AI inference. These chips will be used to power Tesla’s Optimus humanoid robots, self-driving Cybercabs, and SpaceX’s space-based data centers. Musk has framed this project as a direct response to the impending gap between global chip supply and the escalating compute demands of AI. He claims that the current global chip production meets merely 3% of his companies’ projected future needs.

This announcement signifies a significant push towards vertical integration for both companies, which currently rely heavily on global semiconductor suppliers like TSMC and Samsung. The initial chip production is slated for late 2027, with full-scale manufacturing planned for 2028.

Source: TechCrunch — Tesla and SpaceX will invest $16.8B to start building ‘Terafab’ chip factory in Texas