Musk Invites Participation in Terafab Project, Claims Output Value Could Rank in National GDP Top 20
Tesla and SpaceX CEO Elon Musk has invited participation in the Terafab project, stating that the output value of this large facility will rank among the top 20 in national GDP.
Terafab is a semiconductor super factory project jointly promoted by Tesla, SpaceX, and Intel, aiming for an annual output of over 1 terawatt of AI computing power, located in Grimes County, Texas, with an initial investment of approximately $16.8 billion and a planned area of over 100 million square feet.
Musk has previously stated that Tesla and SpaceX will build and operate the factory themselves, with TSMC only able to lease part of the space, while Intel will serve as a process partner providing 14A technology.
The long-term goals of the project include starting with one million wafers per month and producing 10 to 20 billion custom AI and memory chips annually to meet the demands of Optimus robots, Cybercabs, and space data centers. Musk noted that current global capacity can only meet about 2% of his company's needs.
Texas has approved related tax incentives, and the initial phase is expected to create thousands of jobs, with research facilities already under construction at Giga Texas North Campus.
Against the backdrop of constraints in AI chip supply, the project aims to build capacity through vertical integration, concentrating funding and engineering resources at the Texas facility, benefiting internal chip demand from Tesla and SpaceX while reducing reliance on external foundries.
Musk has repeatedly emphasized that existing suppliers cannot meet future demands, thus the necessity to build Terafab.
ABAB AI Insight
Elon Musk has been publicly promoting Terafab since March 2026, integrating chip demands from Tesla, SpaceX, and xAI into a vertically built factory. Historically, Tesla has invested in self-developed AI chips, and this expansion to terawatt-level capacity in collaboration with Intel represents a shift from procurement to large-scale self-production.
The capital path involves an initial investment of approximately $16.8 billion and potential subsequent hundreds of billions into the Texas facility, covering design, manufacturing, and packaging. The motivation is to break through existing global wafer capacity bottlenecks for robotics, autonomous driving, and space computing while retaining operational control.
This is similar to the historical path of large tech companies transitioning from external procurement to vertical integration for key components, and it aligns with other automotive and aerospace companies building their own supply chains. Currently, it is in the expansion phase of site confirmation, initial investment implementation, and recruitment.
Essentially, this is a restructuring of the supply chain: AI and robotics chips are shifting from reliance on external foundries to supply from their own super factory, driven by demand scale exceeding existing global capacity and the willingness for vertical control, directly linking computing output with internal applications.
ABAB News · Cognitive Law
- Output value ranks in GDP top 20, must first build the factory.
- Existing capacity is insufficient, so build it yourself.
- Terawatt computing power starts with recruitment.