Elon Musk announced Terafab, a Texas chip factory that Tesla and SpaceX will build together.The plant will manufacture semiconductors for artificial intelligence and robotics.
Musk said Terafab Texas would become the most valuable building on Earth by far.
Tesla and SpaceX plan to invest $16.8 billion to start construction. Total spending could reach $119 billion across multiple phases, according to regulatory filings reported this week.
Terafab Texas Aims to Be Earth’s Most Valuable Building
Musk made the claim in a post on X, where he also praised the factory’s planned design.
Analyst estimates suggest the facility could generate more than one trillion watts of AI computing capacity each year. It will rely on two-nanometer chip technology, among the most advanced processes available today.
Social media users quickly compared Terafab’s footprint to some of the largest structures on the planet. Side-by-side graphics placed the factory next to Tesla’s own Austin gigafactory, government buildings, corporate campuses, and shopping centers built for millions of annual visitors. One such comparison gathered millions of views within a day.
The Terafab chip factory will span more than 9 million square meters. Musk separately said the site would be roughly 50 times larger than the Pentagon, the headquarters of the U.S. Department of Defense, once finished.
The comparisons landed as Tesla-SpaceX merger speculation intensifies. The two companies increasingly share infrastructure, executives, and capital. Meanwhile, Gigafactory Shanghai sale rumors, which Musk denied last week, show how closely investors track his industrial empire.
Betting on Chips for Robots, Rockets, and AI
Terafab will build chips for Tesla’s Optimus humanoid robots and Full Self-Driving software. It will also produce space-hardened chips for SpaceX satellites and orbital data centers tied to xAI, Musk’s artificial intelligence venture. The project promises at least 3,000 local jobs.
Musk has said existing global chip fabrication covers only about 2% of the compute Tesla and SpaceX expect to need in the coming years. A chart shared alongside the announcement showed expected demand from the two companies far outpacing all currently available new compute capacity.
The strategy reflects a push to cut reliance on outside chipmakers such as Taiwan Semiconductor Manufacturing Company (TSMC). Analysts say established foundries cannot expand output fast enough to meet surging AI demand.
Funding will likely draw on momentum from SpaceX’s record stock debut earlier this year. Tesla’s second-quarter earnings showed AI spending climbing sharply even as profits narrowed. SpaceX’s latest earnings call, held this week, offered early signals on how executives plan to finance projects like Terafab.
Investors will watch whether Tesla and SpaceX can fund Terafab without diverting cash from other priorities. Wall Street analysts, including those at Morgan Stanley, do not expect the first chips to ship before 2028. The factory’s true scale will therefore remain unproven for years. However, even minor delays could ripple across Tesla and SpaceX’s broader roadmap for robotics and space computing.