Musk Plans Dual Chip Fabs in Texas for AI, Tesla

Elon Musk said on March 22 that SpaceX and Tesla plan to build two advanced semiconductor fabrication plants in Austin, Texas, aimed at supporting future vehicle, robotics, and artificial intelligence systems.

The announcement followed Musk’s earlier remarks outlining plans for a large-scale AI chip complex in the city. He said the project would include two separate fabrication facilities, each dedicated to a single chip design to improve production speed and scalability.

“We either build the Terafab, or we don’t have the chips,” Musk said March 21 during a presentation at an Austin facility, noting that current global semiconductor production would meet only a small portion of his company’s future demand. He later added that the dual-fab structure would allow faster iteration and expansion.

“Current fabs are extremely conservative, operating on rigid historical heuristics, which are mostly, but not all, correct,” he said. “Anything that is a rate limiter at the machine level means that the machine will be redesigned, unless already at the limit of physics.”

SpaceX described the project as part of a broader long-term vision, saying in a post on X that the facility represents the “next step to becoming a galactic civilization.” The company added that, together with Tesla and Musk’s artificial intelligence firm xAI, “we’re building the largest chip manufacturing facility ever (1TW/year) – combining logic, memory & advanced packaging under one roof.”

The move comes as semiconductor supply chains remain a central issue in global economic and geopolitical competition, particularly between the United States and China. U.S. policymakers have increasingly emphasized the need to expand domestic chip production and reduce reliance on overseas manufacturing.

President Donald Trump has highlighted semiconductor production as a key component of the country’s industrial strategy. In a Jan. 15 White House fact sheet, the administration said restoring U.S. semiconductor capacity is “critical for economic and national security.”

The U.S. Commerce Department said the same day that it is leading “a whole-of-government effort to revitalize American semiconductor manufacturing.” It also announced a U.S.–Taiwan agreement aimed at strengthening domestic supply chains. “The agreement establishes a strategic economic partnership between the United States and Taiwan to decisively strengthen U.S. domestic semiconductor supply chains and secure America’s technological and industrial leadership,” the department said.

Taiwan remains the dominant producer of advanced semiconductors, manufacturing more than 90 percent of the world’s most advanced chips, largely through Taiwan Semiconductor Manufacturing Co. TSMC and South Korea’s Samsung are currently the only companies capable of producing the most advanced five-nanometer chips.

Commerce Secretary Howard Lutnick said in January that TSMC has acquired “hundreds of acres” near its Arizona facility and could expand further pending board approval. He added that a combined $250 billion investment from Taiwanese companies and government support could help bring more of the semiconductor supply chain to the United States.

“We’re going to bring it all over so we become self-sufficient in the capacity of building semiconductors,” Lutnick said.