Splashy downtown Austin event hints at things to come
Elon Musk announced late Saturday inside the Seaholm Power Plant that his much-anticipated $20 billion Terafab will be start here in Austin. It ends a week of speculation after the billionaire SpaceX and Tesla Inc. founder teased the project in an announcement on his social media platform X.
Musk said the fabrication plant – a joint venture between Tesla, SpaceX and X parent company XAi – will start with a smaller advanced technology site near the Tesla gigafactory but did not outright specify a long-term location. The “Terafab” will result in the production of 1 terawatt of compute annually. That’s about 100 million to 200 million artificial intelligence chips, which will be used to power Musk’s products, from his self-driving vehicles to his Optimus humanoid robots to rockets – and eventually advance Musk’s ultimate goal of multi-planet civilization.
He said all the current fabrication facilities on Earth only produce about 2% of what he would need across all of these projects. And while he credited current chip suppliers, which will soon include Samsung Electronics Co. Ltd. in Taylor, they are not growing at a rate fast enough. That means they won’t have the chips if they don’t build the Terafab – “so we’re gonna build Terafab,” Musk quipped to the audience, which included Texas Gov. Greg Abbott.
“We certainly want our existing supply chain to be clear,” Musk said. “We’re very grateful to our existing supply chain, to Samsung, TSMC, Micron and others, and we would like them to expand as quickly as they can, and we will buy all of their chips. I have said these exact words to them but there’s a maximum rate at which they’re comfortable expanding.”
He said on social media on March 22 that several sites are under consideration for the Terafab as it needs “thousands of acres” and at least 10 gigawatts of power for it. Musk’s companies own significant land holdings in both Bastrop County and eastern Travis County near his Gigafactory.
But, he said in the post: “We couldn’t possibly fit the Terafab on the GigaTexas campus. It will be far bigger than everything else combined there.”
Speculation about the project has dated back to January, when Musk revealed during a Tesla earnings call that the company needs to build its own chip fabrication facility. Musk furthered that speculation when he announced in a tweet on March 14 that the Terafab project would launch in seven days. But he did not share any other details.
Some have been privately wondering if the project is headed to Bastrop County after SpaceX is expanding its square footage to 1.5 million for chipmaking thanks to a $17.3 million grant from the Texas Semiconductor Innovation Fund. But all signs had pointed to action in Travis County, and the sprawling campus in Del Valle that houses the Tesla gigafactory.
Drone footage captured in the last week revealed construction site prep adjacent to the campus, and the Austin Business Journal confirmed the site work during a visit to the site on March 16. A permit submitted to the area fire department for Tesla North Campus was done on March 13. Terafab has in recent days been posting Austin-based jobs, including process engineers.
Musk said March 22 that the building is roughly a 2 million square foot research-and-development fab near the Tesla factory.
Musk companies have for the last day been setting up for the announcement at the historic power plant on the north shore of Lady Bird Lake, prompting social media rumors and speculation. The 118,000-square-foot site most recently housed Athenahealth Inc. and has been available on the sublease market. Some said on social media that they were told to immediately vacate the site right before the announcement. It remains to be seen if Musk companies plan to continue to operate out of the site.
Musk, the world’s richest man, speaking on a stage amid searchlights that could be seen miles from downtown, consistently used the word “epic” to describe the project, claiming that it would quintuple the current annual output of all types of chips worldwide.It’s expected to start production in 2027.
Musk said they plan to make two types of chips and will have all of the equipment necessary to do so in-house including advanced packaging, a process not really handled in the U.S. He has been targeting 2 nanometer process technology – the same size Samsung is targeting at its Taylor site. The first chip will power robots and cars, and then they plan to have higher-powered chips for space.
“If vehicle production on Earth is about 100 million vehicles a year, and I expect humanoid robot production to be somewhere between 1 billion and 10 billion units a year, so it’s a lot,” Musk said. “Tesla is going to make a very significant percentage of those, is our goal.”
Musk has not been shy about plans to eventually house human civilization on other planets. But those ambitions typically pace far ahead of his output. He ended with a plea for the crowd to “join us on this journey.”
