SpaceX, Tesla to Build Chip Plant in Texas to Meet Compute Demand

Published Thursday, August 6, 2026 · 12:17 PM EDT

SpaceX and Tesla plan to build a semiconductor fabrication plant in Texas, with the goal of producing 1 terawatt of compute per year. SpaceX and Tesla, which are both led by Elon Musk, are in need of semiconductor chips for their technologies. The project, known as Terafab, will span 100 million square feet and represent a $16.8 billion investment for the first phase, Texas Governor Greg Abbott said Thursday. The initial phase will also employ 3,000 people, he said. In April, Tesla broke ground on a research fab project in Texas, which it said Thursday was a precursor to the Terafab site. Both Tesla & SpaceX will need far more chips than current & future global production can supply, Tesla said in a post on X. Tesla also said the Terafab will be the biggest chip manufacturing facility ever built. Tesla and SpaceX expect their combined demand for chips will exceed 1 terawatt a year, SpaceX said.

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