Musk said the completed complex would be 50 times the Pentagon’s size and can support over one terawatt of compute demand.
- The first phase will require $16.8 billion, span over 100 million square feet, and create at least 3,000 jobs.
- About 25% of Terafab’s AI compute could power Optimus, with 75% allocated to AI spacecraft.
- Musk said the 3,000 jobs cover only the first of 10 phases and should rise substantially over time.
Shares of Tesla, Inc. (TSLA) are headed for their first weekly gain in four weeks as CEO Elon Musk outlined Terafab’s massive scale, saying the completed Texas semiconductor complex would be 50x the size of the Pentagon and primarily produce AI compute for SpaceX spacecraft.
TSLA stock fell 1% on Thursday to close at $319.53, marking its second consecutive session in the red. However, shares are up 3% so far this week and remain on track to rebound from three straight weekly losses.
Musk Details $16.8B Terafab
SpaceX and Tesla confirmed on Thursday that Terafab will be built in Grimes County, Texas. Its first phase is expected to require $16.8 billion in investment and create at least 3,000 jobs. The vertically integrated complex will span over 100 million square feet, bringing the manufacturing, packaging, and testing of advanced logic and memory chips under one roof.
Musk called Terafab “the largest and most valuable building on Earth by far” on X, adding that it would be “stunningly beautiful.” The facility will address the widening gap between global chip supply and the combined needs of Tesla and SpaceX, which expect their future demand to exceed one terawatt of computing power.
“My very approximate guess is that Terafab AI compute output would be ~25% for Tesla Optimus and ~75% for AI spacecraft,” Musk said on X. Terafab will produce inference chips for Tesla’s Optimus humanoid robots and self-driving Cybercabs, along with high-powered processors for SpaceX’s space-based data centers.
Musk also endorsed the prospect of eventually building a Terafab on the moon and responded on X “FEL FTW” to speculation that the Texas plant could use free-electron laser technology for advanced chipmaking.
Terafab’s First Phase To Create 3,000 Jobs
Terafab’s initial phase will receive a $30 million grant from the Texas Enterprise Fund, but Musk said the first 3,000 jobs represent only the beginning. “3,000 jobs is just for phase 1 of 10 btw,” he said. “The jobs number will be much higher over time. That’s just the first year or so,” Musk added.
The complex will be built in phases across 3,000 acres, while SpaceX controls more than 13,000 acres in the area. The company also plans to construct natural gas-fired power plants and large battery arrays to support the facility. Terafab will use water from the nearby Gibbons Creek Reservoir for industrial operations rather than local groundwater.
The project deepens Musk’s presence in Texas, where SpaceX said its operations have generated more than 56,000 direct and indirect jobs and an estimated $28 billion in economic impact since 2024.
Analyst: Intel’s Terafab Role Remains Unclear
Intel joined Terafab as a partner in April, offering its expertise in designing, fabricating and packaging advanced chips. However, Moor Insights & Strategy Chief Analyst Patrick Moorhead said on X that its precise role remains uncertain. Moorhead said no relevant regulatory filings have detailed the project’s contracts, economics, intellectual-property licenses, capital contributions, equipment commitments or division of responsibilities.
“I’m bullish on Terafab,” Moorhead said, but added that without those disclosures, “it’s uncertain what Intel’s role will be or, for that matter, other foundry companies.” The analyst said Terafab is already holding detailed discussions with semiconductor equipment suppliers. The most complex systems can take two years to deliver and another year to qualify, putting pressure on the project to secure equipment quickly.
Initial production has been discussed for 2029, but Moorhead said it remains unclear whether that target refers to test chips, high-volume manufacturing or an intermediate stage.
How Do Retail Traders Feel About TSLA?
On Stocktwits, retail sentiment for TSLA has been ‘neutral’ over the past week amid a 26% decline in 24-hour message volumes.
One user said, “$TSLA is talking about building the biggest chip plant on Earth. The headline is massive. But when Elon promises terawatts, the real question is whether the wafers actually ship. Building is easy. Yield is hard. The narrative is priced. Execution is what matters.”
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Another user said, “$TSLA wants to build its own chip fab. The scale is massive — a terawatt of compute a year. Vertical integration is the bull case. The bear case is CapEx that size wrecks the balance sheet before the first wafer ships. When you treat silicon as strategy instead of a commodity, you're either brilliant or overleveraged.”
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So far this year, Tesla's stock has lagged its "Magnificent Seven" peers, making it the group's worst performer, down about 29%.
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