Musk Announces $16.8 Billion Chip Factory in Texas

Elon Musk has announced plans for a $16.8 billion semiconductor factory in southeastern Texas that he says will become the largest building in the world.

The facility, called Terafab, will be located roughly 70 miles outside Houston, according to its website. "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," the site says.

Musk, who leads SpaceX and Tesla, unveiled the project as chip manufacturers worldwide expand production to meet surging demand driven by advances in artificial intelligence. SpaceX oversees xAI, Musk's AI venture that competes with OpenAI's ChatGPT and Anthropic's Claude, while Tesla's electric vehicles and humanoid robots also require semiconductors. Combined, the two companies' chip needs are expected to exceed 1 terawatt of compute — more than the world's entire current supply, according to the website.

The factory will cover 100 million square feet, making it the largest facility of its kind, and will be vertically integrated, housing manufacturing, packaging and testing under one roof. It is expected to employ 3,000 people, many from the surrounding area. To limit environmental impact, the plant will draw water from a nearby reservoir rather than local groundwater.

The project ties into Musk's broader ambitions to build space-based data centers and infrastructure. "By building and operating the largest chip manufacturing facility on the planet, we're continuing down a path where future humans can compete over building the largest facilities in the solar system, and eventually the galaxy," the website said.

The announced investment represents only the first phase of construction, with the website noting a future expansion could push "total investment much higher." Texas Gov. Greg Abbott praised the project last week, saying, "Texas is where big ideas grow even bigger."