AI chip facility coming to Austin, Elon Musk announces

AUSTIN, Texas - Over the weekend, tech giant Elon Musk revealed he’s bringing a new $20 billion AI chip facility to Austin, which he says will be the first of its kind in the world.

The backstory:

On Saturday, beams of light could be seen shooting up into the air from the Seaholm Power Plant, laying out the path for Musk to unveil one of his most ambitious projects.

In front of a packed crowd, Musk revealed his newest venture in Austin, the Advanced Technology Fab. The new facility is a joint effort between Tesla, SpaceX, and xAI and is set to be built on Tesla’s campus in Eastern Travis County. It will have a focus on AI chip design and will be able to make AI chips, test them, and make the proper corrections.

"I can't emphasize enough the importance of being able to make a chip, test it and then change the design, do another one, and have that in a single building," Musk said on Saturday night. "To the best of my knowledge, this doesn't exist anywhere in the world."

The Advanced Technology Fab is one of the first steps in Musk’s "Terafab" project, which aims to produce a massive amount of AI chips and computing power which will be used to power vehicles, humanoid robots, and eventually space travel.

"We want to be a civilization that expands to the galaxy with spaceships that anyone can go anywhere they want at any time," said Musk.

In order to power those projects, Musk says he’ll need significantly more AI computing power. His companies typically obtain AI chips from suppliers such as Samsung, TSMC, and Micron, but the demand for his future projects outweighs what is currently being produced.

"All the rest of the output from Earth is about 2% of what we need," said Musk.

Dig deeper:

Through the new Terafab project, Musk will take AI computing into his own hands, with the aim of producing one terawatt of computing power a year, enough to power hundreds of millions of AI chips.

"This is huge news for Austin because we have already been a tech hub, but this brings an entirely new focus on the type of technology that's going to be crucial for artificial intelligence in the future," says Ben Bentzin, an associate professor of marketing at the University of Texas. 

He estimates that the economic boost of the project could be more than double what is initially expected.

"What was announced by Elon Musk this weekend was a $20 to $25 billion number. But the reality is, once you look at all the infrastructure that surrounds it, that could easily be over $40 million of investment," Bentzin said.

Beyond the economic boom that it could possibly bring, the new chip facility could further cement Austin as a rising star in technology and innovation.

"Austin is going to be right at the center of the U.S. and because the U.S. drives AI, that means the center of the world," says Bentzin.

What's next:

As of right now, a timeline for construction and a size estimate for the new Austin facility have yet to be released.

The location of the main Terafab has still to be decided, as Musk says it will need thousands of acres of land and over 10GW of power at full scale.