Tesla and SpaceX have committed $16.8 billion to break ground on Terafab, a colossal semiconductor manufacturing facility located outside Houston, Texas.
The initial investment marks the start of construction for the plant, which could eventually see its total cost scale to $119 billion.
The project is a joint commitment by Elon Musk’s electric vehicle and aerospace companies to establish a massive internal capacity for chip production. The facility, named Terafab, is designed to serve as a central hub for the advanced semiconductors required across both companies’ operations.
By investing in Terafab, Tesla and SpaceX are moving to secure their hardware supply chains. The move reduces dependence on third-party chip manufacturers for the critical components used in Tesla’s autonomous driving systems and SpaceX’s satellite and rocket technologies.
The decision to build the factory in Texas expands Musk’s existing industrial footprint in the state, complementing Tesla’s Gigafactory Texas and SpaceX’s launch and development sites.
While the current commitment stands at $16.8 billion, the projected ceiling of $119 billion indicates that Terafab is planned as one of the largest industrial semiconductor investments globally.
The companies are now moving toward the groundbreaking phase of the project outside Houston.
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