Tesla to Build $16.8B In House AI Chip Production Plant in Texas

Tesla is constructing two new semiconductor facilities in Texas to internalize AI chip production, including a research fab at Gigafactory Texas in Austin and a high-volume production plant in Grimes County called Terafab. The Austin facility will house logic and memory fabrication, lithography, packaging, and testing under one roof, potentially reducing chip development cycles from one year to about one month. The Terafab project is estimated to cost $16.8B, with volume production scheduled for the third quarter of 2028 and a first test chip targeted for mid-2027, though reports indicate Tesla has reopened talks with TSMC regarding joint investment and operational control of the site.