Elon Musk plans to build Terafab in Texas, a semiconductor manufacturing complex that will exceed 100 million square feet and become the world’s largest building by floor area, surpassing China’s New Century Global Center by more than five times.
Tesla and SpaceX announced an initial $16.8 billion investment in the project on August 6, with construction underway in Grimes County north of Houston. The facility will span more than 100 million square feet when fully developed, according to Reuters and USA Today, dwarfing the current record holder, New Century Global Center in Chengdu, which covers 18.9 million square feet.
The vertically integrated facility will consolidate all major chip production processes under one roof. According to Reuters, Terafab will make, package, and test advanced logic and memory chips in a single location, eliminating the need to ship partially completed components between separate factories. TechCrunch reported the chips will be optimized for edge computing and inference, designed for Tesla’s Optimus robots and self-driving Cybercabs, as well as SpaceX’s infrastructure needs.
The scale of the undertaking reflects the intensity of competition for semiconductor capacity. The current largest building by floor area, New Century Global Center, houses a shopping mall and indoor water park. Terafab’s footprint will be more than five times larger, according to LinkedIn analysis of the project specs. At full scale, the facility will require over 10 gigawatts of power, equivalent to a large power plant’s output.
Production is expected to begin in 2027, according to Forbes and Electrek. Small-batch production of Tesla’s AI5 chip began in late 2026, with volume production ramping through 2027. The project represents a significant shift in how major technology companies approach semiconductor supply chains. When Tesla and SpaceX first announced Terafab in March 2026, Lexology noted the announcement signaled “a turning point in how US technology companies approach computing infrastructure,” marking a move toward vertical integration and domestic manufacturing control.
The venture also involves xAI, Musk’s artificial intelligence company. The total potential investment could reach $119 billion as the facility expands to full capacity, according to CNBC, making it one of the most capital-intensive manufacturing projects ever undertaken. Grimes County officials have supported the project, which is expected to create at least 3,000 jobs, according to Yahoo Finance.
Musk has positioned Terafab as essential to AI leadership. On X, he stated the facility “will be the largest and most valuable building on Earth by far. And it will be stunningly beautiful,” underscoring his ambition for the project to reshape both the semiconductor industry and industrial architecture itself.
Sources
- USA Today — Initial $16.8B investment announcement, facility size and job creation
- Reuters — Vertical integration details, chip production processes, August 6 announcement
- TechCrunch — Chip applications for Tesla and SpaceX, August 6 reporting
- Tom’s Hardware — Facility size comparison to current largest building
- World Atlas — New Century Global Center floor area confirmation (18.9 million sq ft)
- CNBC — Total potential investment of up to $119 billion
- Forbes — Production timeline, small-batch production in 2026, volume in 2027
- Electrek — Production timeline and construction duration estimates
- Lexology — Strategic significance as turning point in US tech manufacturing approach
- Yahoo Finance — Job creation estimates and Grimes County location
