Elon Musk 20B Terafab Will Start in Austin

Elon Musk is planning a $20 billion semiconductor fabrication facility, known as the Terafab, which is set to significantly expand his companies’ industrial presence in Central Texas.

Musk confirmed the development during an event at the Seaholm Power Plant in downtown Austin on Saturday. The Austin Business Journal reported that the announcement follows months of speculation regarding the billionaire’s next major real estate and infrastructure developments in the region.

The project will be a joint venture between Tesla, SpaceX and xAI, focusing on the production of high-volume artificial intelligence chips, according to the outlet. The initial phase of the development involves the construction of a 2 million-square-foot research-and-development facility near the existing Tesla Gigafactory. Construction site preparation has already been observed adjacent to the Del Valle campus, with work confirmed by local observers in mid-March.

Filing activity in Travis County suggests a rapid turnaround, with a permit for Tesla North Campus filed with the local fire department on March 13. That is expected to be a precursor to a much larger industrial complex that will require substantial acreage.

Musk indicated that the full-scale Terafab will eventually require “thousands of acres” to accommodate its production goals. He noted on social media that the facility will be far larger than the current Giga Texas campus and cannot be contained within its existing boundaries.

The project’s infrastructure needs are equally massive, requiring at least 10 gigawatts of power to operate at full capacity, according to the publication.

While Travis County remains the primary focus, SpaceX is also expanding its presence in nearby Bastrop County with a 1.5 million-square-foot chipmaking facility, supported by a $17.3 million grant from the Texas Semiconductor Innovation Fund.

The selection of the Seaholm Power Plant for the announcement also sparked interest in the 118,000-square-foot historic site. The facility, which recently housed Athenahealth, has been on the sublease market, though it remains unclear if Musk’s companies will maintain a permanent presence there, according to the publication.

The Terafab is projected to begin production in 2027, aiming to quintuple the current annual global output of semiconductor chips. Musk stated that the facility will handle advanced packaging in-house, a process rarely performed in the United States.

Musk told the audience that current global supply chains are not expanding fast enough to meet his companies’ projected needs. The facility is expected to produce between 100 million and 200 million AI chips annually to power vehicles, robots and aerospace technology.

This massive scale aligns with Musk’s goals for humanoid robot production, which he estimates could eventually reach 1 billion to 10 billion units globally.

— Eric Weilbacher