Tesla plans massive Terafab chip plant in Texas to power its AI ambitions

Tesla is taking another step into AI hardware. On August 10, the company announced plans to build Terafab, a large-scale AI chip facility in Grimes County, Texas.

The facility is being planned to support more than 1 terawatt of computing power a year, with Tesla looking to use the chips across its autonomous driving, humanoid robot and space computing projects.

Inside Tesla's Terafab chip plant

Work on the Terafab chip development site began in April at the north campus of Tesla Giga Texas. The project is planned to cover more than 100 million sq ft (around 9.3 million sq m) of manufacturing space.

Unlike the traditional chip supply chain, where different stages are handled by separate suppliers, Terafab is designed to bring much of the process under one roof. Advanced logic and memory chips will be manufactured, packaged and tested at the same site.

The processors produced there are expected to power Tesla's Optimus humanoid robots and Cybercab robotaxis, while high-power chips will also be developed for SpaceX's space-based data centres.

25% for robots, 75% for space

Tesla CEO Elon Musk said around 25% of Terafab's computing capacity will be used for Tesla's Optimus humanoid robots, while the remaining 75% will go towards AI spacecraft and space-based data centres.

Musk also described Terafab as more than just a chip plant, highlighting its role in bringing cutting-edge manufacturing to America.

The project is expected to create thousands of high-paying jobs in Texas and help Tesla secure the computing hardware it needs for everything from AI on the ground to future space projects.