Elon Musk announced on March 23 that he plans to build a $20 billion semiconductor fabrication facility, known as the Terafab, in Central Texas. The announcement was made during an event at the Seaholm Power Plant in downtown Austin.
The project is expected to significantly expand Musk’s companies’ industrial footprint in the region. The Terafab will be a joint venture between Tesla, SpaceX, and xAI, with a focus on producing high-volume artificial intelligence chips.
The initial phase includes constructing a 2 million-square-foot research-and-development center near the existing Tesla Gigafactory. Site preparation has already started adjacent to the Del Valle campus. A permit for Tesla North Campus was filed with local authorities on March 13 and is seen as an early step toward developing a much larger industrial complex requiring substantial land.
Musk said that the full-scale Terafab will eventually need “thousands of acres” due to its production goals and will be much larger than Giga Texas. He also stated that infrastructure needs are significant, with at least 10 gigawatts of power required for full operation.
SpaceX is expanding separately in Bastrop County with a new chipmaking plant supported by state funding. The Seaholm Power Plant’s role remains unclear following its use for this announcement. Production at Terafab is projected to begin in 2027 and aims to increase global semiconductor output fivefold. Musk told attendees that current supply chains cannot keep up with his companies’ projected demand and said the new facility would produce between 100 million and 200 million AI chips annually for vehicles, robots, and aerospace uses.
