Terafab Unveiled: $16.8B Tesla-SpaceX MegaFab (largest building on EARTH)

Kind: captions Language: en We either build the terraab or we don't have the chips. And uh we need the chips. So we're going to build terafab. >> [music] [music] >> We got an epic update on the Terrafab joint project between Tesla SpaceX today. But before we get to that, for those who missed it or want a reminder, I've put together a short super cut with some highlights from Elon Musk's original Terrafab announcement presentation back in March this year. I strongly recommend watching this, but if you want to skip ahead, jump to the 9 minute and 15 second mark in this video. We'll talk about the new details announced today. >> Important announcement to make, which is uh the most uh epic chip building exercised in HISTORY BY FAR. THIS IS REALLY GOING TO TAKE THINGS TO the next level. So yeah, a level probably people aren't even contemplating right now. This is not in the I would call this an sort of an out of context problem. Uh it's not in their context. So we're going to adjust the context by a few orders of magnitude here. It's it's a joint effort. So it's a very big thing by current human standards but but still small in the grand scheme. Um and uh but but very difficult for humans. So to to accomplish this very difficult goal really requires a combination of efforts of SpaceX, XAI and Tesla working together to create this epic uh terap project. So, [applause] and you know, Tesla and XAI and SpaceX have all done amazing things uh that people did not think would be done before. Uh so, there's the the Giga Giga Texas fab here. Uh there's, you know, the the the Optimus robot that's being built. There's a a global supercharging network. Um there's really quite a lot. Um, and it wasn't that long ago when people thought electric cars would wouldn't amount to anything. Um, and there were there were basically no electric cars for sale when uh when Tesla started. Um, and people said it was impossible. And now Tesla's making 2 million electric cars a year. And then XAI, although it's a new company now part of SpaceX, uh, has also built the first gigawatt scale computer cluster, which uh, in record time. Uh Jensen Hong from Nvidia said he'd never seen anything built so fast in his life before. So uh a great compliment from from Nvidia. And then SpaceX uh well I guess you can read it for yourself. I you already know. I mean the reusable rockets uh people said that reusable rockets weren't possible and even if you did do them they wouldn't be economically feasible. So we did them and then we made them economically feasible. Um and now we've landed over 500 times. uh and then we did the the Falcon Heavy and now we're doing Starship and Starship is is a critical piece of the puzzle because in order to scale uh compute and scale power you have to go to space which means that you need massive payload to space um and Starship will enable that. In order to get to the terowatt uh of compute per year uh you need about 10 million tons to orbit per year and at 100 kow per ton. So, but we're confident this is feasible like no [snorts] new physics or impossible things are required to to get there. So, then the key missing ingredient is therefore a terowatt of compute. So, this announcement is about solving the key missing ingredient. to give you a sense of um what we're talking about. Uh the current output of AI compute uh is roughly 20 gawatt per year. This chart explains why we need to build the terra because all of the rest of the output from Earth is about 2% of what we need. So if you add up all the fabs on Earth combined, they're only about 2% of what we need for the Terra Fab project. So uh you know I we we certainly uh want our existing supply chain to be clear. We're uh very grateful to our existing supply chain uh to Samsung, TSMC, Micron and and and others. Uh and we would like them to expand as quickly as they can. um and we will buy all of their chips. Uh I have said these exact words to them. Um and uh but but there's there's a maximum rate at which they're comfortable uh expanding but that rate is u much less than we would like. And so we we either build the terraab or we don't have the chips and uh we need the chips. So we're going to build terap and we're starting off with an advanced technology fab here in Austin. So in the advanced technology fab uh we we will have all of the equipment necessary to make a chip of any kind logical memory and we will also have all of the uh equipment necessary to make the lithography masks. So in a single building we can create a lithography mask uh make the chip uh test the chip make another mask and and and have an an incredibly fast recursive loop for improving the chip design. Uh to the best of my knowledge, this doesn't exist anywhere in the world where you've got everything necessary to build logic, memory, and do packaging and test it and then do the masks, improve the masks and and just keep looping it. So, and we're not just going to do conventional compute in this. I think there's some very interesting uh new physics uh that is potentially that that actually I'm confident will work. It's just a question of when. Um, so this is going to we're really going to push the limit of physics in in compute and we're going to try a bunch of wild and crazy things which you can do if you've got that fast iteration loop that I can't emphasize enough the importance of being able to make a chip, test it and and then make and then change the design, do another one and have that in a single building. the I I think that our recursive improvement with that situation is probably an order of magnitude better than anything else in the world. So, broadly speaking, we expect to make uh two two kinds of chips. One will be optimized for uh edge inference. So that'll be used primarily in Optimus and in the cars but but especially in Optimus because I expect uh the robots uh humanoid robots to be made uh 10 to 100 times more than the volume of cars. And then we need uh a high power chip that is designed for space. uh that takes into account uh the more difficult environment in space where you've got you you've got high energy ions, photons, you got electron buildup. It's it's a hostile environment in space. So you want to design the chip uh you want to optimize it for space. The for the space compute my guess is that is the vast majority of the compute because you you're power constrained on Earth. That's why I think it's probably 100 to 200 GW a year of terrestrial chips um and probably on the order of a terowatt of chips in space. Um just because of power constraints on the ground. What do you do after a terra? Um don't think small. Uh well yeah good point. Uh so we um you know how do you get to a pedawatt? Uh is is the obvious next question. And um you get there by having um an electromagnetic mass driver on the moon with robots with optimi and obviously lots of humans and uh with that you can send uh a pedawatt you can create a pedawatt of compute and send that to deep space because on the moon moon has no atmosphere and has 16th earth gravity so you can you don't need rockets on the moon you can literally accelerate it uh to escape velocity from the surface and uh that dramatically drops the cost once again of harnessing power and uh and enables you to go a thousand times bigger than a terowatt. So for sure the future I want to see I I want us to live long enough to see the the mass driver on the moon cuz that's going to be incredibly epic. The big news from today co-announced by the joint venture partners Space X and Tesla sharing some info on X. Elon Musk also adding Terraab Texas will be the largest and most valuable building on Earth by far and it will be stunningly beautiful. As we saw in the new promo video, some renderings of the actual site, the actual building, actual dimensions, actual design. This is epic. Now, take a moment if you're a Tesla and or SpaceX investor to consider the implications. Terapab Texas, the scale of this project. They are not around. This will literally be by far the largest building on Earth. Not one of the largest. No, no, no. The largest building on Earth by far. Let's head over to the official announcement page today, which is on the SpaceX website. Interesting. August 6, 2026. Breaking ground on Terraab in Texas. The foundations for an exciting future are being built in Texas. Earlier this year, for those of you playing along at home, it was March of this year. SpaceX and Tesla announced Terraab, the most epic chip building effort in the world, combining logic, memory, and advanced packaging all under one roof. In April, and again, for those of you playing along at home, the month after the official announcement presentation, the super cut of which I featured earlier in this video, literally the next month, Tesla broke ground on a new research fab on the north campus of Giga, Texas, the precursor to Terapab. And today, we are announcing that Terrafab will be built in Grimes County, Texas. The facility will be an advanced semiconductor fab that will bridge the divide between current global chip supply and the compute demand of the future. The combined SpaceX and Tesla demand for chips is expected to be in excess of 1 terowatt of compute which is significantly larger than the current global supply. And by the way, that's putting it lightly. We'll get to more detail on this in a moment, but I'll get through the rest of the announcement first. While we are deeply appreciative of our current chip suppliers and encourage them to expand production whenever possible, this looming gulf between supply and demand is at the core of Terapab's necessity. On screen is a chart embedded in the article with a caption will exceed global chip supply. On the left, you can barely see it. This tiny little sliver is available new compute as of today. On the right, we have expected compute demand from Tesla and SpaceX. Looks like a pancake next to a skyscraper. Terrafab will be epic in both its mission and its sheer size. Designed to build new compute at an unprecedented scale and speed. A vertically integrated factory with more than 100 million square ft of manufacturing space is planned. This facility will house the manufacturing, packaging, and testing of advanced logic and memory devices. Bringing these aspects together in one location will enable fast recursive improvements and accelerate new compute deployed. Terrafab will produce chips optimized for edge computing and inference for use in hardware like Tesla's Optimus robots and self-driving cyber cabs along with high power chips designed for operating SpaceX's space-based data centers, bringing back advanced manufacturing to America. Advanced chips are becoming foundational infrastructure for the modern economy. AI systems, satellites, secure communications, and advanced manufacturing all depend on reliable access to compute hardware. Much of the world's semiconductor production remains concentrated overseas, and the United States has recognized the importance of rebuilding advanced manufacturing capacity domestically. Terapab aligns with that broader national effort by expanding high-end manufacturing capacity in Texas. Texas has become central to our operations through Starbase, Bastrop, and McGregor. Thanks to its commitment to innovation, manufacturing, and American leadership, SpaceX's growing Texas footprint alone has already generated more than 56,000 direct and indirect jobs, over 28 billion in estimated economic impact since 2024, and hundreds of millions in indirect tax revenues since 2024. The initial phase of Terraab is estimated to require approximately $16.8 billion in capital investments from SpaceX and Tesla with potential future expansion phases, bringing total investment much higher. This facility will employ at least 3,000 people, many of whom will be from Grimes and nearby Brazos County. Continuing the trend of our other Texas sites where between 60% and 80% of new hires are local residents, Grimes County offers strategic advantages for long-term industrial investment, including infrastructure access, available land, and proximity to major Texas markets. This project represents a significant opportunity for skilled trades, construction employment, suppliers, and contractors, and long-term technical workforce development. We intend to work with local schools and workforce partners to help create pathways for future employment opportunities, responding to the unique needs of each community. Now, just jumping in here quickly, if it isn't obvious, this major announcement is demonstrating how well Texas is looking after SpaceX and in return how well SpaceX will benefit Texas. The state has been extremely welcoming to Musk's enterprises. The polar opposite of Commie, where Musk was effectively run out of town by psychopathic, deranged politicians, crippling policies, too much bureaucracy, and red tape. In short, Terrafab is huge for Texas and Texas will be huge for Terapab. SpaceX and Tesla also take our role as being good stewards of the environment seriously. The Terrafab site is committing to the use of Gibbons Creek reservoir water for industrial operations rather than local groundwater. Planned on-site wastewater treatment facilities, water reuse and conservation efforts, compliance with all applicable environmental and pollution control laws, and management of hazardous materials, chemicals, and industrial byproducts in accordance with all applicable regulations while striving to exceed them. And again, you can see very clearly SpaceX with this announcement attempting to get ahead of the FUD. They're going to be whipped up by a bunch of retards out there. >> Oh no, a big factory. Oh, it's going to ruin the environment. >> And so on. Whether they'll be successful in getting ahead of this, I doubt, but at least they've tried. Building an exciting future. We believe continued progress and leadership in space, AI, and advance to manufacturing will depend on the ability to build critical technologies domestically. By building and operating the largest chip manufacturing facility on the planet, we're continuing down a path where future humans can compete over building the largest facilities in the solar system and eventually the galaxy. If you want to be part of building that exciting future, come join us. So, they're wrapping it up with somewhat of a recruiting post as well. This is incredible stuff. The project was officially announced in March. They broke ground on the first facility almost like a research lab at small scale the next month and just a few months after that this announcement today they've selected the site for the full scale terap which again will be the largest building on the planet by far I want to underscore the scale of output here what they're intending to reach a terowatt they need to meet their demand this is expected computer demand from Tesar and SpaceX the whole purpose the need the necessity of the terra project is because global chip supply is not going to get close to this number. Meaning both Tesla for the Optimus robots and cybercaps and SpaceX in particular for the data centers in space need to resolve this bottleneck. Hence the Terraab project. Talk about taking matters into your own hands at truly absurd scale. To nerd out just a little bit in particular for the SpaceX investors listening. PS so much for the alleged lockup bloodbath today. More on that later, maybe in another video. SpaceX recently disclosed they have roughly 1.4 gigawatt of AI computer online currently, a portion of which they're monetizing at roughly 28 billion a year. They have an extremely ambitious goal of bringing online somewhere in the vicinity of 5 to 8 plus gawatt in the next year or two. Just really rough numbers. Let's just scale it up and say they get to 10 gawatt over the next couple of years. There are 1,000 gawatt in a terowatt. The scale and ambition of the Terrafab project is so utterly gigantic that your brain will not be able to compute. There has never been a more ambitious project. Period. And let's be clear, zero people, at least outside of SpaceX and Tesla, zero people believe that they'll get even close to achieving this goal. It's just so gigantic, so colossal, so outrageously ambitious. No one, even the most optimistic people out there, are going to accept this as reasonably likely. In fact, in fact, I think you'll have a very hard time finding anyone that thinks this could happen, period. Even in the most bullish scenario, it's that absurdly ambitious. In the interest of full disclosure, I model out the total output from the Terapab project over the next 20 years out until 2046. I'm not kidding, by the way. on screen now. Sneak peek at the actual Terrafab sheet in my 20-year Tesla and SpaceX valuation model, which can confirm is now live on Patreon. For more info, just check out the link in the description or head to patreon.com/solving the money problem. I literally model out gawatt per year of compute produced at the Terapab project from 2026. Spoiler alert, zero, all the way out until 2046. I've got a base case scenario. I've got a bullcase scenario plus. I have a mild bear case and a gigabear case. And I can confirm, so can my Patreon supporters who've got access to the model right now. In none of these scenarios, not even the bullcase. Not even by 2046 does Terrafab output reach, let alone exceed 1 terowatt per year. They do however make meaningful progress toward that goal over the 20-year model time horizon. But even I, the deluded fanboy of fanboys, allegedly pathologically optimistic, totally out of his mind, not even I, not even in my bullcase, in a 20 year time horizon, am yet able to consider it a reasonable possibility. Yet, despite the fact that I've just said that, I know they could pull it off, and that is what they are aiming for. This is just to emphasize the truly absurd ambition and scale of the Terra project. I'm not even at 1 terowatt or terrafab output in the bullcase in 2046. At least not yet. But I'll be watching this project as it continues to scale and any new meaningful data points will be integrated into the model. So, who knows? By the way, did I mention my new 20-year Tesla and SpaceX evaluation model is now live on Patreon, available to supporters at the investor level and above. Oh, I did already mention the model is now available on Patreon. Okay, good, cuz I just wanted to make sure that everybody knew where to find the model. Let's get back to the point. I have taken pains to model out the terrafab project and even I known for being extremely optimistic and not even close at least in the base case still a little bit of distance away in the bullcase not even close to the 1 terowatt output goal it's just that big I'm not here to tell you whether or not they'll achieve the goal ultimately getting to a terowatt plus of annual capacity but that's what they'll ultimately be aiming for and that's before we talk about the mass driver on the moon where in the announcement back in March Arch Musk threw out how do we go from a terowatt to a pawatt? Spoiler alert, 1,000 terowatts in a pawatt. I saw a great and highly relevant post on X recently from Aaron. You guys might be familiar with the Arc Invest collaborative SpaceX valuation model after the earnings call. Aaron added that their model was dramatically conservative on a few core things including AI compute and enterprise mix for Starink. This is a really well said point from Aaron. Quote, "As model builders, it's comforting to be on the conservative side of optimism. So we are wrong in the right way. As truth seekers, it's often the case that comfort runs contrary to finding truth. It's hard to find that balance sometimes. And I can confirm currently I am having a very difficult time finding that balance. It is absolutely possible, especially by 2046, that the terab joint venture between Tesla and SpaceX, which at that point is probably just a venture between whatever the new company is called. Wait, what? Could have reached 1 terowatt per year of output. It's shockingly ambitious, but that does not mean it's impossible. We also know this is what they are aiming for, and I would never bet against Elon Musk. Even if the Terapab project falls dramatically short of its ultimate long-term goal, even getting a fraction of the way there will be a monumental achievement and have an absurd impact on and off Earth. And today's announcement is a major milestone. In the leadup to this, they'll have considered numerous locations, different cities, states, what makes the most sense, where can we spool up, power fastest, build fastest, get things moving quickest at the biggest scale, which states will work with us as opposed to against us. the amount of time, work, and energy that went in behind the scenes to get to this point of officially announcing the site for the Terraab project, not just the precursor, but the actual biggest building on Earth by far with the actual publicly stated goal of 1 terowatt per year of output. Now, all we need to do is sit back and pay close attention to the rate of progress. And while this is a joint venture between Tesla and SpaceX, it seems quite clear to me that the majority of the capital involved in this project will be fronted up by SpaceX. So, probably worth considering this. A Space X venture with support from Tesla. At least that's how I'm thinking about and modeling it. Don't worry, I know what you're thinking. Oh no, he's going to plug the model again, isn't he? Don't worry, I won't do that to you. Of course, the entire discussion of who's doing what may soon potentially become entirely irrelevant, at least if the two companies become one. Thanks for watching. If you appreciate the content and want to support the channel, check out the links below where you can get early access to daily videos, unlock hundreds of exclusive pieces of content, and plenty more. AG1 has been part of my daily health protocol for almost half a decade. 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