Musk's Terafab chip megafactory

Terafab is a jointly developed chip fabrication project by Tesla, SpaceX, and xAI, announced March 21, 2026, at the Seaholm Power Plant in Austin, Texas. The full-scale complex is planned for Grimes County, Texas, and could cover up to 10 million square metres. SpaceX estimated initial investment at $55 billion, with total costs potentially reaching $119 billion across all phases; one analysis described the venture at $25 billion, with Morgan Stanley estimating the full cost at $35-40 billion and projecting chips would not emerge before 2028 under an optimistic scenario. The facility targets over one terawatt of annual AI compute capacity, with the goal of integrating chip design, lithography, fabrication, memory production, packaging, and testing under one roof. Tesla confirmed it will use Intel's 14A process, making Intel the first major external customer for that node, which Intel had withheld capacity investment in until a large anchor customer committed. Musk said current global fab capacity covers only about 2% of what Tesla and SpaceX will eventually need. Musk offered an approximate breakdown of planned compute output: roughly 75% for AI spacecraft and 25% for Tesla Optimus.