Elon Musk's Massive Terafab Chip Factory Begins Construction in Texas
Construction has officially begun on "Terafab," a massive semiconductor factory in Grimes County, Texas, jointly developed by Tesla, SpaceX, and Intel with an initial investment of $16.8 billion. The facility's planned footprint of 100 million square feet is larger than several global landmarks combined, including the Pentagon and Apple Park. The factory aims to secure over one terawatt of computing power for Tesla and SpaceX, addressing future AI demands that exceed current global chip supply capacities by tenfold. Its vertical integration model could reshape semiconductor manufacturing by combining logic, memory, packaging, and testing under one roof. The project is estimated to cost up to $119 billion, making it one of Musk's most expensive ventures, though SpaceX has acknowledged the high risks of failure associated with such an unprecedented scale.
## BACKGROUND
Semiconductor manufacturing typically relies on a highly fragmented global supply chain, where design, fabrication, packaging, and testing are handled by different specialized companies across the world. Elon Musk announced the Terafab project in March 2026 to bypass these supply chain bottlenecks by building a fully self-sufficient, vertically integrated chip ecosystem.