Tesla and SpaceX announced on Thursday that they will jointly develop "Terafab," an advanced semiconductor factory to be built in Grimes County, Texas, outside Houston, and that they will make an initial $16.8 billion investment in the project.
Elon Musk, chief executive of both Tesla and SpaceX, wrote in a post that the facility will be "the largest and most valuable building on Earth by far." According to SpaceX, the site is planned to include more than 100 million square feet of manufacturing space (over 9.2 million square meters).
The companies say the facility will employ at least 3,000 people from Grimes County and nearby Brazos County.
Purpose and planned operations
SpaceX’s website describes Terafab as an advanced semiconductor fabrication facility intended to bridge the gap between current global chip supply and future compute demand. The planned vertically integrated factory would house manufacturing, packaging, and testing of advanced logic and memory devices in a single location to enable fast, recursive improvements and accelerate the deployment of new compute.
SpaceX said Terafab will produce chips optimized for edge computing and inference for use in hardware such as Tesla’s Optimus robots and self-driving Cybercabs, as well as high-power chips designed for operating SpaceX’s space-based data centers.
Costs and partners
The companies specified an initial investment of $16.8 billion. Separately, SpaceX has indicated in filings that it may spend as much as $119 billion on the project across a multi-phase construction plan, though the company did not discuss Terafab on its most recent earnings call.
Intel has said it will contribute to the Terafab project but has been vague about the exact nature of its contribution.
Local impacts and concerns
SpaceX stated it is committing to use water from the local Gibbons Creek Reservoir rather than local groundwater.
The announcement followed a heavily attended county meeting on Wednesday, where hundreds of residents raised concerns about millions of dollars in tax breaks awarded to the project and a perceived lack of transparency.
Dr. Sarah Borowicz, superintendent of Anderson-Shiro Consolidated Independent School District, said in a statement released by the Texas Governor’s office: “We believe this agreement will strengthen our district, expand opportunities, and better prepare our students for their future. There are defining moments in the life of a school district, and this is one of those moments. Our commitment now is to ensure that every opportunity created through this agreement is managed wisely, transparently, and always with students at the center of every decision.”
Summary
The Terafab announcement outlines an ambitious semiconductor manufacturing investment in rural Texas: an initial $16.8 billion outlay for a facility planned to exceed 100 million square feet and to employ thousands. The project aims to produce chips for robotics, autonomous vehicles and space-based data centers, while prompting local debate over incentives and transparency.
