Elon Musk’s SpaceX and Tesla will invest $16.8 billion in their planned joint TeraFab in Grimes County, Texas.. However, potential future expansion phases could push total investment much higher, SpaceX said in a post on its website on August 6, claiming that the chip fab will span more than 100 million square feet (9.3 million sqm) of manufacturing space at full build-out..
A rendering of the TeraFab from the SpaceX website – SpaceX. In a post on his social media platform X, Musk described the fab as “the largest and most valuable building on Earth by far,” adding that “TeraFab will be 50 times the size of the Pentagon when complete.”. SpaceX said the facility will employ at least 3,000 people, many of whom will be from Grimes and nearby Brazos County.
In June 2026, the project secured a 100 percent property tax abatement after County commissioners voted 4-1 to approve three proposals.. Referring to potential environmental concerns, SpaceX and Tesla said it takes “our role as being good stewards of the environment seriously,” adding that the site was committed to using Gibbons Creek Reservoir water for industrial operations rather than local groundwater..
The project is also planning to have “on-site wastewater treatment facilities; water reuse and conservation efforts; compliance with all applicable environmental and pollution control laws; and management of hazardous materials, chemicals, and industrial byproducts in accordance with all applicable regulations.”. The idea for the TeraFab was first floated by Musk at a Tesla annual shareholder meeting in November 2025.
At the time, Musk said that if Tesla were to extrapolate the best-case scenario for chip production from its suppliers, it still wouldn’t be enough, which had led him to propose the Tesla ‘TeraFab’ – “it’s like giga but way bigger.”. He went on to confirm plans to build a semiconductor plant in Austin, Texas, in March 2026, with the site set to be adjacent to Tesla’s headquarters and run as a joint venture between the automaker and SpaceX..
Musk said the facility will produce chips for space data centers, advanced vehicles, and humanoid robots. More recently, however, Musk has said SpaceX’s Starmind satellites will use Nvidia’s Vera Rubin hardware.. The following month, Intel announced it had joined the TeraFab project, with Musk later claiming the fab would use the chipmaker’s 14A chip manufacturing process..
The original cost estimate for the project was $20 billion, but after SpaceX filed a property tax abatement application with the county in May, it was revealed that the initial phase of the project would cost $55bn, with the potential for the figure to reach $119bn once the fab is fully built.. “The combined SpaceX and Tesla demand for chips is expected to be in excess of 1 terawatt (TW) of compute, which is significantly larger than the current global supply,” the post on the SpaceX site read.
“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.“. More in IT Hardware & Semiconductors. 17 Mar 2026.
07 Apr 2026. More in North America. 29 Jul 2026
