SpaceX and Tesla are advancing plans to build Terafab, a massive semiconductor manufacturing complex in Grimes County, Texas, backed by an initial phase investment exceeding $16.8 billion. Elon Musk, who serves as CEO for both companies, announced the project details, describing the planned facility as “the largest and most valuable building on Earth by far.” The manufacturing hub is designed to consolidate advanced chip production, memory production, advanced packaging, and testing under one roof to supply specialized processors for artificial intelligence infrastructure across land, air, and orbit.
The joint semiconductor manufacturing facility will occupy a site near the Gibbons Creek Reservoir, situated roughly 100 miles from Tesla’s headquarters in Austin and about 20 miles east of College Station, home to Texas A&M University. According to corporate plans, the complex will feature 100 million square feet of manufacturing space, making it approximately ten times the size of Tesla’s Gigafactory Texas. Industrial operations at the site will draw water from the Gibbons Creek Reservoir rather than local groundwater.
State officials have moved to support the development through economic incentives and regulatory cooperation. Texas Governor Greg Abbott announced that the project has been awarded a $30 million grant from the Texas Enterprise Fund. In addition, Grimes County has approved waiving property taxes to facilitate construction. Governor Abbott stated that “Texas is where big ideas grow even bigger,” emphasizing the expansion of investment in the state.
Terafab Infrastructure and Chip Production Scope
Terafab is engineered to address supply constraints in the global technology sector by producing specialized processors tailored to autonomous systems and orbital computing. The facility will manufacture advanced artificial intelligence chips designated for Tesla’s Optimus humanoid robots and self-driving Cybercab robotaxis. Furthermore, the complex will fabricate dedicated processors for SpaceX’s planned satellite-based data centers, which are intended to execute high-performance computing tasks directly in orbit.
SpaceX has characterized orbital data centers as the “only truly scalable solution for the future of AI,” citing abundant solar energy in space alongside reduced land, cooling, and regulatory constraints compared to terrestrial data centers. Together, SpaceX and Tesla project that their combined semiconductor demand will exceed 1 terawatt of computing capacity, surpassing current global industry supply levels. Musk characterized the initiative as “the most epic chip-building effort.”
While the initial phase carries a price tag exceeding $16.8 billion, regulatory filings submitted in May detail a much larger financial commitment. Initial project outlines projected spending of up to $55 billion, with total expenditures potentially reaching $119 billion if additional phases are completed. Intel has also stated its intention to contribute to the Terafab project as a partner.
Expanding Industrial Footprint Across Texas
The Terafab project deepens Elon Musk’s industrial footprint across the state of Texas. SpaceX already operates its Starbase rocket-manufacturing and launch complex near Boca Chica, produces Starlink hardware in Bastrop, and conducts rocket engine testing operations in McGregor. SpaceX officially relocated its headquarters from California to Starbase in 2024, joining Tesla, which has been headquartered in Austin since 2021.
The Terafab complex is expected to create at least 3,000 jobs. These positions will encompass engineering roles, technicians, and plant operators. Construction timelines and initial equipment installation schedules will be detailed in upcoming regulatory and municipal filings as site preparation proceeds near College Station.