Billionaire Elon Musk announced on March 21 plans for a semiconductor fabrication project in Austin, KUT News reported. It will be near Tesla’s existing manufacturing campus, he said.

The planned Austin facility would include two manufacturing plants, Reuters reported.

It would be the first hub for a larger $20B project, dubbed Terafab, to scale up semiconductor chip production, Musk said in a video posted by SpaceX.

He said the main facility will span thousands of acres.

The announcement, made during an event at the historic Seaholm power plant mixed-use space in downtown Austin, was short on details. A location for the manufacturing campus has not yet been selected, Musk said. No timeline or square footage was provided for either the Austin campus or the overall Terafab project.

The Terafab project would produce more than one terawatt of artificial intelligence computing power annually.

Musk said such computing power was not just necessary for his companies' future growth but also for humanity’s ability to explore the galaxy. Currently, he noted, all of the chip plants on the planet produce just about 2% of what he says is required for his plans.

Terafab would vertically integrate chip production and help end Tesla’s dependence on external chip suppliers such as TSMC and Samsung, The Street reported.

In March 2025, SpaceX announced plans to expand its current Starlink chipmaking plant in Bastrop by 1M SF, following a $17.3M grant from the Texas Semiconductor Innovation Fund. Many industry watchers assumed at the time this meant Musk would use this site for Terafab.

However, construction activity in the past few weeks near the Austin Tesla factory and new job listings for Terafab in the city led to intense speculation of this announcement in recent days.

Musk said Texas Gov. Greg Abbott was in attendance at the Saturday night event. The Terafab announcement comes as Texas officials rethink the state’s power rules to adapt to a recent wave of data centers that has put significant pressure on the state’s already strained electrical grid.