WORLDTECHTesla and SpaceX unveil Terafab chip project with a $3 billion first phase
Tesla and SpaceX are building Terafab, a joint project to design and produce advanced AI chips in a vertically integrated operation. Construction started in April 2026 on a facility estimated to cost $3 billion.
Confirmed details of the project
According to the report, Elon Musk announced Terafab on March 21, 2026. The project is described as a joint effort between Tesla, an automotive and solar company based in Palo Alto, and SpaceX, a space company based in Hawthorne.
The aim is a vertically integrated semiconductor operation that makes advanced AI chips, with the goal of shortening the time needed to develop new chips. The estimated cost is $3 billion and construction began in April 2026.
Research fab and main production site
The first element is a research fab at Tesla's Giga Texas campus in Austin, designed for rapid prototyping. That means testing new chip designs quickly before committing to mass production.
The main production site is planned for Grimes County, Texas. The report says the facility carries an initial investment of $16.8 billion, with plans for more than 100 million square feet of operational space and at least 3,000 jobs.
Why the companies want their own chips
Terafab is mainly intended to supply chips for Tesla's vehicles, its Optimus humanoid robots and its Cybercabs. SpaceX has its own motive, since it plans space-based data centers that will need AI hardware of their own.
The project's long-term goal is 1 terawatt of annual AI compute capacity. Intel joined as a foundry partner on April 7, 2026, a role in which it manufactures chips designed by other companies, and the partnership targets Intel's 14A process node.
Open questions
- How the $3 billion estimate and the $16.8 billion initial investment relate to each other is not explained?
- When the Grimes County production site is expected to begin operating is not stated?