Musk Bets Big on AI Chips

Tesla and SpaceX team up on a $16.8 billion AI chip factory in Texas

TDT | Manama

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Elon Musk's technology giants, Tesla and SpaceX, have announced a joint venture to build a $16.8 billion semiconductor manufacturing facility in Grimes County, Texas, in a move aimed at securing the future supply of advanced AI chips.

Named Terafab, the mega-project will manufacture custom processors for Tesla's Optimus humanoid robots, autonomous Cybercabs and SpaceX's expanding satellite and space-based computing network. The companies say growing demand for artificial intelligence is expected to outpace the production capacity of existing global chipmakers, making dedicated manufacturing increasingly important.

The planned 100-million-square-foot facility will integrate every stage of semiconductor production under one roof and is expected to deliver more than one terawatt of AI computing capacity annually.

Intel will provide manufacturing support during the project's first phase, while Texas has pledged $30 million through the Texas Enterprise Fund to support the investment. The development is also expected to create at least 3,000 high-skilled engineering and technology jobs.

To reduce environmental impact, the companies plan to use water from the nearby Gibbons Creek Reservoir for industrial cooling rather than drawing on local groundwater.

The $16.8 billion investment marks the first phase of a broader expansion strategy that could eventually become one of the world's largest AI semiconductor manufacturing hubs.