Elon Musk's companies SpaceX and Tesla have announced plans to collaborate on a chip-building factory in Texas named Terafab, which will measure over 100 million square feet and is expected to become the largest building in the world.

Terafab is set to be built in Grimes County and span over 100 million square feet (9.3 million square metres), exceeding the current world's largest building by floor area, the 65 million-square-foot (six million-square-metre) AvtoVAZ main assembly building in Russia.

"Terafab will be epic in both its mission and in its sheer size, designed to build new compute at an unprecedented scale and speed," said SpaceX in an announcement.

The enormous factory will encompass manufacturing, packaging, and testing of advanced logic and memory devices, creating semiconductors for chips to be used in devices such as Tesla's Optimus robots and self-driving Cybercabs, as well as SpaceX's planned data centres in space.

SpaceX predicts chip demand to be "larger than the current global supply"

A render of Terafab shows a symmetrical pair of two rectangular factory wings that end in a curving roof, with a long road running through the centre.

SpaceX claimed that its and Tesla's needs for chips will exceed the world's current supply, driving the need for their own factory.

"The combined SpaceX and Tesla demand for chips is expected to be in excess of one terawatt of compute, which is significantly larger than the current global supply," said SpaceX.

"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 Terafab's necessity."

The first phase of Terafab is expected to cost $16.8 billion (£12.4 billion), and the facility will use water from the Gibbons Creek Reservoir for its industrial operations.

Once complete, SpaceX and Tesla expect Terafab to provide 3,000 jobs, with the majority of hires coming from the local area.

"We believe continued progress and leadership in space, AI, and advanced manufacturing will depend on the ability to build critical technologies domestically," said SpaceX.

"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."

Last year, Musk's infrastructure firm The Boring Company announced plans for a 17-kilometre transport tunnel under Dubai, designed to link the city with speeds of up to 100 miles per hour.

The photo is courtesy of SpaceX.