Tesla has announced plans to build a massive semiconductor manufacturing facility, dubbed Terafab, in Grimes County, Texas, as the electric vehicle maker seeks to secure chip supplies for its expanding artificial intelligence and computing operations.
The cTeslaompany said the proposed facility is intended to become the largest chip manufacturing plant ever built, with a target production capacity of more than one terawatt of compute per year.
Texas Governor Greg Abbott said the first phase of the project will involve capital expenditure exceeding US$16.8 billion, underlining the scale of the investment and its significance for the state’s technology and manufacturing sectors.
Tesla disclosed the plans in a post on X, where it said the new facility is being developed to address what it believes will be a widening global shortage of advanced chips.
According to the company, both Tesla and Elon Musk’s aerospace company, SpaceX, are expected to require more semiconductors than current and projected global production can provide, making in-house manufacturing a strategic priority.
Tesla also revealed that it broke ground in April on a research fabrication facility at the North Campus of its Giga Texas site. The company described the research facility as a precursor to Terafab, where chip manufacturing technologies will be developed and refined ahead of full-scale production.
The announcement highlights Tesla’s growing focus on artificial intelligence infrastructure as it expands beyond electric vehicles into autonomous driving, robotics and advanced computing. By investing heavily in semiconductor manufacturing, the company aims to strengthen control over a critical part of its supply chain while supporting the computing demands of its future technologies.
If completed as planned, Terafab would rank among the world’s most ambitious semiconductor manufacturing projects, reflecting the increasing competition among technology companies to secure advanced chip production capacity amid surging demand for AI computing.
