Tesla and SpaceX Commit 16.8 Billion Dollars to Build Terafab Chip Factory in Texas
Tesla and SpaceX announced a joint $16.8 billion investment to build Terafab, a semiconductor manufacturing facility in Grimes County, Texas. The facility is designed to produce chips for Tesla's Optimus robots and Cybercabs, as well as SpaceX's space-based data centers. The project is expected to create at least 3,000 jobs and could eventually cost up to $119 billion across multiple phases.
Tesla and SpaceX announced a joint $16.8 billion investment to build Terafab, a semiconductor manufacturing facility in Grimes County, Texas, on August 6, 2026.
The facility is designed to produce chips for Tesla's Optimus robots and self-driving Cybercabs, as well as high-power chips for SpaceX's space-based data centers. Elon Musk said the project is necessary to meet computing demands that exceed current global production rates.
Terafab is planned as a vertically integrated site that consolidates manufacturing, packaging, and testing of advanced logic and memory devices in one location. The facility is projected to exceed 100 million square feet, which would make it the largest building in the world.
The project is expected to create at least 3,000 jobs, primarily in Grimes and Brazos counties. SpaceX has committed to using water from the local Gibbons Creek Reservoir rather than local groundwater.
Intel confirmed its participation in the project, though the specific nature of its contribution was not disclosed.
The $16.8 billion represents the first phase of the project. SpaceX filings suggest total multi-phase spending could reach $119 billion.
The project received a $30 million grant from the Texas Enterprise Fund and qualifies under the state's Texas Jobs, Energy, Technology, and Innovation program.
Tesla currently maintains separate chip supply contracts, including a $16.5 billion deal with Samsung for its AI6 chip and agreements with TSMC. Terafab is intended to provide long-term internal production capacity.
