Austin · Grimes County, Texas·Announced March 21, 2026
Terafab
The joint Tesla · xAI · SpaceX · Intel chip megafactory — designed for more than one terawatt of AI compute per year.
Announced at the defunct Seaholm Power Plant in Austin. Vertically integrated: design, lithography, memory, advanced packaging, and test under one roof. Tesla AI5 is the first publicly committed product; the long-term target is one million wafer starts per month.
Prototype phase capex
$119B
SpaceX estimate, May 2026
AI compute target
1
TW / yearVertically integrated output
Process node
2nm → 14A
Prototype 2nm · Full-scale Intel 14A
Long-term capacity
1M
wafers / mo100–200B chips per year
What it is
One trillion watts of AI compute, made in-house.
Terafab consolidates the entire semiconductor production chain — chip design, lithography, memory, advanced packaging, and test — into a single integrated facility in Texas: a prototype line in Austin and the full-scale plant in Grimes County. The argument behind it is that the three Musk companies are already the largest internal consumers of custom AI silicon in the world, and that buying that silicon from third-party foundries is now the binding constraint.
The stated output target is a terawatt of AI compute per year. The stated throughput target is one million wafer starts per month — between 100 and 200 billion custom AI and memory chips annually. The Austin prototype line targets a 2nm process; the full-scale Grimes County facility will run on Intel’s 14A node. The prototype phase alone is budgeted at $119 billion; independent estimates put the full build-out at $5–13 trillion.
The consortium
Four companies, one fab
Partner
Tesla
Demand anchor and lead designer for the edge-inference line — AI5 onwards for Full Self-Driving, Optimus, and the robotaxi fleet.
Partner
xAI
Compute customer. Designs training-scale silicon for Colossus and successor clusters. Drives the “terawatt of AI compute” framing.
Partner
SpaceX
Demand anchor for the space-hardened variant — Starlink, orbital data-center hardware, and on-board satellite inference.
Partner
Intel
Foundry partner. Joined officially April 7, 2026. Its 14A node is the chosen process for the full-scale facility — the prototype line in Austin still targets 2nm.
Source — Musk, Terafab announcement
In his own words
“The most epic chip-building exercise in history by far.”
Musk, Seaholm announcement, March 21, 2026.
“We either build the Terafab, or we don’t have the chips, and we need the chips, so we build the Terafab.”
Musk, on the rationale for going vertical.
“One million wafer starts per month — between 100 and 200 billion custom AI and memory chips per year.”
On the long-term scaling target.
What it makes
Four product lines
01
Edge inference (Tesla)
Tesla AI5 is the first declared product. Inference-optimized silicon for FSD vehicles, the Optimus humanoid, and the robotaxi fleet — small-batch in 2026, volume in 2027.
02
Space-hardened compute (SpaceX)
A radiation-hardened variant for Starlink, orbital data centers, and on-board satellite inference. Decoupled from terrestrial supply chains by design.
03
Training silicon (xAI)
Larger training-scale chips destined for Colossus and its successors. The “1 TW of AI compute per year” framing is anchored here.
04
Memory + packaging
Terafab targets the full stack under one roof — lithography, memory production, advanced packaging, multi-chip modules, and test. No external dependency for any production stage.
Construction status
Timeline
March 21, 2026
Announcement at Seaholm Power Plant
Musk unveils Terafab at the defunct Seaholm Power Plant in Austin. Tesla, xAI, and SpaceX named as founding partners. The headline number is one terawatt of AI compute per year.
April 7, 2026
Intel joins as foundry partner
Intel formally enters the consortium. Its 14A process is named as the manufacturing technology for the full-scale facility.
April 13, 2026
Austin site earthwork begins
Foundation preparation starts on the Austin site, adjacent to Tesla’s Gigafactory Texas. A Tesla research fab — roughly $3B, a few thousand wafers per month — anchors the early footprint.
May 2026
Capex reframed at $119B
SpaceX restates the all-in prototype phase budget at $119 billion — up from the $20–25 billion topline used in announcement coverage. Initial investment alone is put at $55 billion.
May 2026
Prototype throughput revised down
The originally floated prototype capacity of ~100,000 wafer starts per month is walked back to a few thousand per month, in line with what a single research fab can realistically run before the full-scale facility comes online.
August 2026
Full-scale site: Grimes County
Tesla and SpaceX name Grimes County, Texas — outside Houston, near College Station — as the full-scale site, with an initial $16.8 billion investment, more than 100 million square feet of manufacturing space and at least 3,000 jobs.
December 1, 2026
Grimes County construction start
Planned construction start per Texas state filings from early September 2026, with completion targeted by the end of 2028.
2026
AI5 small-batch
Tesla AI5 begins small-batch production on the prototype line. The chip is the first publicly committed product of the facility.
2027
AI5 volume production
Volume manufacturing of AI5 targeted for 2027 on the early Terafab tooling.
Long term
1M wafer starts / month
Stated full-scale target: one million wafer starts per month and 100–200 billion custom AI and memory chips per year — putting Terafab in the same throughput tier as the largest TSMC and Samsung fabs combined. Independent estimates put the full-scale build-out at $5–13 trillion. The full-scale facility is planned for Grimes County; Austin hosts the prototype line.
For scale
The full-scale target is TSMC-class throughput, owned in-house.
TSMC, all fabs (2024)
~1.6M
wafer starts / month, all nodes
Terafab — long-term
1.0M
wafer starts / month, AI-focused
Tesla research fab
~3K
wafers / month, ~$3B build — revised down from an initial 100K figure
Sources & further reading
- ↗Terafab — official site
Primary recruiting and brand site for the project.
- ↗Wikipedia — Terafab
Capex, partners, process node, location, timeline.
- ↗Tom’s Hardware — Musk unveils $20B Terafab
Announcement coverage. The terawatt framing and the 1M wafer starts / month target.
- ↗CNBC — chip fab to cost up to $119 billion
Source of the $55B / $119B prototype-phase capex numbers (May 2026).
- ↗EE Times — Intel enters pact with Tesla and SpaceX
Confirmation of Intel’s foundry role and the 14A process choice.
- ↗TechCrunch — $16.8B to start building in Texas
Grimes County site, initial investment and jobs (August 2026).
- ↗Spectrum News — plant takes shape in Grimes County
State filings: construction start Dec 1, 2026, completion end of 2028.
- ↗Electrek — $25B Terafab announcement
Day-after reporting from the Seaholm announcement.
Want a deeper dive — latest capex, node roadmap, hiring news? Ask Nova AI — it has live web search and can pull the latest Terafab reporting in real time.