Tesla and SpaceX Commit $16.8 Billion to Build Terafab Chip Factory in Texas

Tesla and SpaceX will invest $16.8B to start building 'Terafab' chip factory in Texas

Tesla and SpaceX said Thursday that "Terafab," the advanced chip factory they are jointly developing, will be built in Grimes County, Texas, outside Houston, and that they will make an initial investment of $16.8 billion in the project. The factory will be "the largest and most valuable building on Earth by far," Elon Musk, CEO of both companies, wrote in a post on Thursday. More than 100 million square feet of manufacturing space is planned for the facility, according to SpaceX. The companies say the facility will employ at least 3,000 people from Grimes and nearby Brazos County. "The facility will be an advanced semiconductor fab that will bridge the divide between current global chip supply and the compute demand of the future," a post on SpaceX's website reads. The animus behind Terafab is that Musk's vision of the future -- one where millions of robots take over human jobs, robotaxis do all the driving, and satellites become data centers for AI training and inference -- requires a phenomenal amount of computing power, far more than what current production rates support. SpaceX alone has suggested in filings that it may spend as much as $119 billion on the project across a "multi-phase" construction plan -- although the company didn't talk about Terafab at all on its first earnings call earlier this week. Intel has said it will contribute to the Terafab project, although it's been cagey about its exact contributions. "Terafab will be epic in both its mission and in its sheer size, designed to build new compute at an unprecedented scale and speed. A vertically integrated factory with more than 100 million square feet of manufacturing space is planned. This facility will house the manufacturing, packaging, and testing of advanced logic and memory devices," SpaceX writes on its website. "Bringing these aspects together in one location will enable fast, recursive improvements and accelerate new compute deployed. Terafab will produce chips optimized for edge computing and inference for use in hardware like Tesla's Optimus robots and self-driving Cybercabs, along with high-power chips designed for operating SpaceX's space-based data centers," the company wrote. SpaceX said in its post that it is "committing to the use of" water from the local Gibbons Creek Reservoir instead of local groundwater. The announcement followed a heavily-attended county meeting on Wednesday where hundreds of residents attended and raised concerns about millions of dollars in tax breaks awarded to the project, as well as a lack of transparency. "We believe this agreement will strengthen our district, expand opportunities, and better prepare our students for their future," Anderson-Shiro Consolidated Independent School District Superintendent Dr. Sarah Borowicz said in a statement released by the Texas Governor's office. "There are defining moments in the life of a school district, and this is one of those moments. Our commitment now is to ensure that every opportunity created through this agreement is managed wisely, transparently, and always with students at the center of every decision."

SpaceX, Tesla to initially spend $16.8 billion on Terafab chip plant in Texas

Aug 6 (Reuters) - Elon Musk's SpaceX and Tesla will initially invest $16.8 billion to build Terafab, an advanced AI semiconductor complex in Grimes County, Texas, as the companies race to secure the chip capacity that the billionaire has called essential to their future. The facility is intended at narrowing the gap between global chip supply and the more than 1 terawatt of computing power that SpaceX and Tesla expect to need in the coming years. Future expansion phases could push total investment much higher, SpaceX said in a statement on its website on Thursday, adding that the facility would employ at least 3,000 people. "The Terafab is bringing cutting-edge manufacturing to America, creating thousands of high-paying jobs in the Lone Star State, and enabling us to produce AI chips at scale for use on Earth and in space," Musk said. Musk has been tightening integration of AI efforts across his companies, with SpaceX acquiring his startup xAI earlier this year in a deal focused on building space-based data centers, before going public in June in the largest-ever IPO. The vertically integrated, 100-million-square-foot Terafab plant will make, package and test advanced logic and memory chips under one roof, producing processors needed to power Tesla's Optimus robots and Cybercabs, as well as high-power chips to run SpaceX's space-based data centers. A May filing showed SpaceX has proposed an initial investment of $55 billion to build the Terafab, with the total amount rising to $119 billion if extra phases are completed. To aid the efforts, SpaceX earlier this year partnered with Intel, which has been trying to expand its chip contract manufacturing business as part of a turnaround effort. Tesla broke ground in April on a research facility at the North Campus of its Giga Texas plant, a precursor to Terafab. The Grimes County site sits near the Gibbons Creek Reservoir, whose water the companies plan to use for industrial operations rather than local groundwater. It adds to SpaceX and Tesla's growing Texas footprint, alongside sites at Starbase, Bastrop and McGregor. "Texas is where big ideas grow even bigger," the state's governor, Greg Abbott, said in a statement. (Reporting by Aditya Soni and Anhata Rooprai in Bengaluru; Editing by Anil D'Silva)