Tesla and SpaceX to invest $16.8B to kick off 'Terafab' chip factory in Texas

Tesla and SpaceX announced on Thursday that Terafab, the advanced chip factory they are jointly developing, will be constructed in Grimes County, Texas, outside Houston, with an initial capital injection of $16.8 billion. In a social media post, Elon Musk, CEO of both companies, described the facility as "by far the largest and most valuable building on Earth." According to SpaceX, the site will encompass more than 100 million square feet of manufacturing space. The companies expect the plant to employ at least 3,000 workers drawn from Grimes and neighboring Brazos County.

SpaceX describes Terafab as a state-of-the-art semiconductor fab aimed at spanning the gap between present-day chip supply and the computing requirements of tomorrow. The project stems from Musk's vision of a future in which millions of robots take over human jobs, robotaxis manage all driving, and satellites serve as data centers for AI training and inference — a future that demands computing power far exceeding current production levels.

In regulatory filings, SpaceX has indicated it might spend as much as $119 billion on the multi-phase construction, although the company did not mention Terafab during its earnings call earlier this week. Intel has confirmed it will participate in the project, but has not disclosed specifics.

SpaceX's website states that Terafab will produce chips optimized for edge computing and inference for hardware such as Tesla's Optimus robots and self-driving Cybercabs, along with high-power chips intended for SpaceX's orbital data centers. The company also committed to using water from the local Gibbons Creek Reservoir rather than tapping into groundwater.

The announcement came a day after a well-attended county meeting, where hundreds of residents voiced concerns over the millions of dollars in tax breaks awarded to the project and a perceived lack of transparency. In a statement released by the Texas Governor's office, Anderson-Shiro Consolidated Independent School District Superintendent Dr. Sarah Borowicz expressed support, saying the agreement would strengthen the district and better prepare students for the future.