Elon Musk unveiled an ambitious plan Saturday night to build what he calls the world's largest semiconductor manufacturing complex in Austin, Texas - a joint venture between Tesla, SpaceX and xAI he is calling "Terafab."
Musk launched the project at an event inside the old Seaholm Power Plant in downtown Austin, with Texas Governor Greg Abbott among those in attendance. Musk clarified Sunday that Terafab will technically consist of two separate fabrication facilities, each producing a single chip design - one for use on Earth and one built for space.
The facility for terrestrial chips will be optimized for edge inference, primarily powering Tesla vehicles, the Cybercab robotaxi and Optimus humanoid robots. The second chip will be a higher-power design hardened for the space environment, intended for SpaceX satellites and xAI data centers in orbit.
Musk described the project as "the most epic chip building exercise in history by far," with an estimated price tag of $20 to $25 billion. The facility is designed to consolidate every stage of semiconductor production under one roof - chip design, lithography, fabrication, memory production, advanced packaging and testing.
The project is planned for an area near Tesla's existing Austin headquarters and Gigafactory, known as Giga Texas. Construction activity was already visible near the site last week, according to the Austin Business Journal, and multiple Terafab job openings on Tesla's website list Austin and Palo Alto as locations.
Musk framed the project as a supply chain necessity. He said semiconductor manufacturers aren't producing chips fast enough to keep up with his companies' AI and robotics needs, stating: "We either build the Terafab or we don't have the chips, and we need the chips, so we build the Terafab."
Terafab would eventually produce one terawatt of computing capacity per year - roughly double what the entire United States currently generates. At full scale, that would represent approximately 70% of TSMC's entire current global output, produced by companies with no prior semiconductor manufacturing experience.
Musk said on Sunday that the Austin-area facility would initially focus on chip design, and that the main Terafab production site would require thousands of acres, with multiple locations still under consideration. He gave no construction timeline.
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