Ground grading and foundation excavation are now visibly underway at Giga Texas for Terafab — the joint chip fabrication facility being built by Tesla, SpaceX, and xAI. Drone footage captured this week offers what may be the first real sense of the building's footprint, and the scale is significant. Here's what we know about the project so far.
1. The Official Name Is Terafab — and It Involves Three Companies
This isn't just a Tesla project. Terafab is a joint venture between Tesla, SpaceX, and xAI, following SpaceX's acquisition of xAI in an all-stock deal. Elon Musk officially launched the project on March 21, 2026. The consolidation of three of Musk's most chip-hungry enterprises under one fabrication roof is the core strategic logic here — each company is competing for semiconductor supply that the broader market simply cannot deliver fast enough.
2. The Location Is Giga Texas North Campus — With a Second Site Planned
The facility currently breaking ground sits on the North Campus of Giga Texas in Austin, Texas, adjacent to the new Optimus humanoid robot factory site. That's not the only location in play: a larger, more extensive Terafab installation is also proposed for Grimes County, Texas, near the Gibbons Creek Reservoir. A public hearing for a property tax abatement agreement related to that Grimes County site was scheduled for June 3, 2026, suggesting both sites are advancing in parallel.
3. The Investment Numbers Are Staggering
The initial cost estimate for Terafab sits at $20–25 billion. SpaceX has indicated plans to initially spend $55 billion on the project, with a potential ceiling of $119 billion if all additional phases are constructed. Tesla's CFO has acknowledged that the full Terafab cost is not yet incorporated into Tesla's already-record capital expenditure plan for 2026 — meaning the financial commitment could grow considerably from what's currently priced into Tesla's balance sheet.
4. The Target Technology Is 2-Nanometer Chips at Massive Scale
Terafab is designed to produce semiconductors using 2-nanometer process technology — among the most advanced nodes in production anywhere in the world. The production targets are equally ambitious: an initial output of 100,000 wafer starts per month, scaling to 1 million wafer starts per month at full capacity. That translates to between 100 and 200 billion custom AI and memory chips annually, and a stated goal of generating 1 terawatt of computing power per year.
5. The Chips Power Tesla's Most Critical Programs
For Tesla owners, the downstream impact is direct. Terafab chips are intended to power Full Self-Driving (FSD), the Cybercab robotaxi program, and Optimus humanoid robots. On the SpaceX side, the same facility will supply chips for orbital compute systems and AI data centers in space. Musk has been explicit about why in-house fabrication is necessary: current semiconductor manufacturers cannot expand fast enough to meet the combined demand across these programs, and existing global chip output represents only a fraction of what is required.
6. Terafab Will Actually Be Two Separate Fabs
One detail worth noting: Musk has clarified that Terafab will technically be two fabs, not one. One will focus on chips for cars and humanoid robots; the other will supply artificial intelligence centers in space. That distinction matters for understanding the construction timeline — what's taking shape at Giga Texas North Campus is one half of a larger, two-facility architecture. The adjacent Optimus factory is targeting high-volume output starting in Summer 2027, which gives a rough reference point for when the broader North Campus buildout needs to be operational.
Construction progress is still in early stages — ground grading and foundation prep are the beginning of a multi-year build — but the pace of activity visible from drone footage suggests the project is moving with urgency. For Tesla owners watching FSD and Cybercab timelines, Terafab's construction schedule is now one of the most consequential infrastructure stories to follow.
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Sarah focuses on Tesla Energy, SpaceX missions, and the broader Musk AI portfolio. Former data analyst in clean energy. Based in San Francisco.
Sources verified at publish time. Spotted an inaccuracy? Email editorial@basenor.com.
