Elon Musk, the world’s richest person, has already invested plenty in Texas through his companies like SpaceX and Tesla. Recently, he announced that the state will host his biggest project yet — literally, anyway: A massive semiconductor plant in Grimes County, northwest of Houston.
The so-called Terafab facility will create microchips to help power Musk’s various high-tech assets, from self-driving cars to rockets to Mars. Plans for the fully built factory include more than 100 million square feet of manufacturing space.
Tim De Chant, a senior reporter for Tech Crunch, spoke to the Texas Standard about the facility’s size, and how Musk plans to power it. Listen to the interview in the player above or read the transcript below.
This transcript has been edited lightly for clarity:
Before we get too far down the road, we should take a moment to touch on just how big this facility is going to be. Can you give us a better sense of its scale?
If it’s fully built out, it’s gonna be pretty big. It’s supposed to cover about 3,000 acres, supposed to create 3,000 jobs. And if it’s able to produce as many chips as they expect, Elon Musk has said that they’re gonna do about a million wafer starts per month. That’s kind of industry standard lingo for how many kind of round pieces of silicon they feed through — depending on the size of the chips, you can get more or less per wafer.
But to put some context on that, TSMC, which is the largest, leading-edge semiconductor manufacturer in the world, does about 17 million wafer starts per year. So this would nearly double the global supply if they can get it up running.
So what sort of advantages does this site in Texas offer to the facility?
Yeah, I mean, Texas has a lot of land. That’s certainly one thing. There’s also access to abundant electricity, natural gas. They have said they’d power this by natural gas.
And of course there are the usual government incentives. They’re getting a full county tax abatement and a $30 million grant from the state.
You wrote about how Tesla and SpaceX plan to power the chip factory. What’s notable about that to you?
To me, I think the thing that was interesting is that they plan on powering it, it sounds like almost entirely by natural gas, which is interesting because this is a joint venture between Tesla and SpaceX. So even though both are owned or significantly owned by Elon Musk, they’re not the same company yet.
But given the joint venture’s nature of it, I would expect that at least some solar panels would come from Tesla into this, but that doesn’t seem to be the case.
Well, let’s talk about that. I mean, why not include solar, at least to brag about it? I mean particularly when Musk’s companies, as you mentioned, already develop solar projects.
They do, I think part of it is that solar would require a lot of land in order to power this. Let’s be honest about that. Solar does require a lots of land, and chip fabs require a lot energy. Some of it’s heat, and that’s harder to provide by electricity. It’s not impossible by any sense, but it’s certainly cheaper if you have access to natural gas.
But the power plants themselves, I thinks he’s betting that he can get it up and faster than if he were to do solar. I’m not sure that’s necessarily the case. A lot of solar farms can be up and running in 12 to 18 months, for example.
So I think this is just him leaning on a playbook that they developed with xAI up at their Memphis data center, which also relied heavily on natural gas.
Do you mind digging into that for me? Because I mean, I would think, because such a big facility’s got such a big roof, that seems like lots of space for solar panels. But it would take quite a bit more than that to actually power what’s going on inside.
It does, yeah, and I don’t have the exact numbers on it, but because solar is intermittent, right, it only works when the sun is out, you would then have to have battery backup and stuff like that. So, something like solar, wind, and batteries work best when they’re kind of used in concert with one another, and that of course works best when you connect it to the grid.
Given grid backlogs around the country, including in ERCOT, it’s a gamble at this point where he’s saying we’re going to take on some of this price risk in natural gas to get the facility up and running faster than if we were to try to connect to the grid.
Well, and that gets to my last question really was, is this part of a broader trend when it comes to what we’re seeing with data centers and similar facilities powering themselves? Is what Elon Musk doing here kind of what we are seeing across the board?
It’s definitely a trend. A lot of the hyperscalers like Google and Meta and Microsoft have been purchasing majority renewables and having those connected to the grid and then withdrawing energy from the grid.
But you are seeing a trend in companies, including Amazon as well, buying or saying they’re going to plan and build large natural gas power plants to power their data centers, so-called “behind the meter.” So not connected to the grid, but directly to their data center.
We’ll see if that’s a good bet. I spoke with one analyst recently that thinks that natural gas prices might spike three to four times what we’re seeing today in some places because of this added demand coupled with increased exports of natural gas.
