SpaceX and Tesla are moving ahead with a more than $16.8 billion first phase of Terafab, a planned 100-million-square-foot semiconductor manufacturing complex in Grimes County, Texas, that could eventually become one of the largest industrial projects in the country.
The companies confirmed the Texas location and initial investment on August 6, giving the long-discussed Terafab project a defined site and a concrete first-phase investment. Texas Gov. Greg Abbott’s office said the initial phase will create about 3,000 jobs and received a $30 million Texas Enterprise Fund grant. Terafab also qualifies under the state’s Texas Jobs, Energy, Technology, and Innovation (JETI) program.
The announcement puts new scale behind a project that SpaceX and Tesla have described as a vertically integrated chip manufacturing operation designed to bring logic, memory and advanced packaging together at a single campus.
Terafab Planned as 100M-Square-Foot Semiconductor Campus
Terafab is planned for Grimes County, Texas, where the Texas Comptroller’s JETI documentation identifies the project as the Terafab Advanced Manufacturing Campus.
Tesla, SpaceX and xAI are developing the project to consolidate the semiconductor production lifecycle—from integrated-circuit design and photomask generation to wafer fabrication, advanced packaging and system-level integration—at one site.
The scale is extraordinary. Terafab’s website describes a planned 100 million square feet of manufacturing space, roughly 10 times the size of Tesla’s Gigafactory Texas, and targets production of up to 1 terawatt of compute hardware per year.
The Texas governor’s office likewise describes Terafab as a 100-million-square-foot operation that will consolidate semiconductor production under one roof. The planned workforce includes engineers, technicians and plant operators.
The Texas Comptroller’s JETI application describes a broader campus that could include supporting power generation and a space-compute test facility alongside semiconductor manufacturing and advanced packaging.
$16.8B Is the First Phase, Not the Full Project
The more than $16.8 billion figure announced August 6 represents the first phase of Terafab rather than the project’s total potential investment.
Earlier Texas Comptroller filings describe the development as a project that could proceed through up to four phases. Those documents envision between $55 billion and $119 billion in capital investment across the initial phases, depending on future capacity requirements, technology development and market demand.
The filings also indicate that individual phases could operate independently, allowing Terafab to expand manufacturing capacity in stages rather than requiring the entire campus to be completed before production begins.
That distinction is important: $16.8 billion is the current first-phase commitment, while $119 billion represents a potential longer-term build-out.
Texas Site Has Advanced Through Development Process
Although the August 6 announcement formally confirmed the Grimes County location, Terafab had already advanced through Texas’ economic-development process.
The Texas Comptroller’s JETI application identifies Grimes County as the proposed site and describes initial development activities, including prototype fabrication and process validation, associated with the broader Terafab effort.
Those activities should not be confused with full-scale construction of the planned 100-million-square-foot Terafab campus.
Grimes County records also show that local officials have established a SpaceX reinvestment zone and approved economic-development and tax-abatement arrangements connected to the project.
The development will require substantial infrastructure to support semiconductor manufacturing at this scale, including power, water, transportation and other site services.
What Terafab Will Manufacture
SpaceX and Tesla are building Terafab around the idea of controlling more of the semiconductor supply chain themselves.
The planned facility is designed to handle multiple stages of production, including chip design, photomask generation, wafer fabrication, memory production, advanced packaging and system-level integration.
Terafab’s own materials identify Tesla’s AI5 and AI6 chips as part of the planned production ecosystem, with the chips intended to support Tesla’s Full Self-Driving systems and Optimus humanoid robots.
SpaceX has also identified semiconductor production as a critical part of its future computing strategy. The company’s prospectus says Terafab is intended to expand its internal chip manufacturing capabilities and help address future semiconductor supply requirements.
Intel Joins Terafab Manufacturing Effort
Intel is also part of Terafab’s semiconductor technology strategy.
The tech giant has said it partnered with SpaceX, xAI and Tesla on Terafab, citing rapidly growing demand for advanced computing and the need to increase semiconductor manufacturing capacity.
Intel is expected to contribute expertise in chip design, fabrication and advanced packaging. The partnership is intended to help develop manufacturing technology capable of supporting the high-performance chips required by Tesla and SpaceX.
The involvement of Intel gives Terafab access to established semiconductor manufacturing expertise while allowing SpaceX and Tesla to pursue a more vertically integrated production model.
Terafab Targets Tesla and SpaceX’s Growing Compute Demand
Terafab ultimately supports the enormous computing demands of Tesla and SpaceX’s broader technology ambitions.
For Tesla, the facility will support AI chips for autonomous vehicles and Optimus robots. For SpaceX, semiconductor production will help the company build increasingly large AI-computing systems, including planned computing infrastructure in orbit.
Terafab’s stated production target is 1 terawatt of compute hardware annually.
That figure refers to the computing capacity of the hardware the facility aims to produce, rather than the amount of electricity the factory itself would consume.
Project Brings 3,000 Jobs and State Support
The first phase will create approximately 3,000 jobs in Grimes County, according to the Texas governor’s office.
The positions will include engineers, technicians and plant operators, creating a significant new advanced-manufacturing workforce in the region.
Texas has also committed public incentives to the project. The state awarded SpaceX a $30 million Texas Enterprise Fund grant, while Terafab qualified for incentives under the JETI program.
Local agreements involving Grimes County and area school districts also form part of the project’s economic-development framework.
The governor’s office said SpaceX selected Texas because of its business climate, workforce, infrastructure and logistical advantages.
What Comes Next for Terafab?
The immediate milestone is development of Terafab’s first phase in Grimes County, but public documents do not yet establish a definitive date for when the entire 100-million-square-foot complex will begin production.
The JETI application describes a phased development model in which individual manufacturing phases can operate independently, with additional phases dependent on decisions involving capacity, technology and market demand.
That makes the more than $16.8 billion first phase the clearest measure of Terafab’s current commitment.
The potential $55 billion-to-$119 billion build-out represents a much larger long-term development scenario rather than an amount SpaceX and Tesla have committed to spend immediately.
For now, the August 6 announcement has moved Terafab toward a defined Texas development: a 100-million-square-foot semiconductor manufacturing campus, an initial investment exceeding $16.8 billion, approximately 3,000 planned jobs and a multi-phase expansion strategy that could eventually push investment beyond $100 billion.
Terafab is not the only major manufacturing investment Tesla is pursuing in Texas. The company is also seeking tax incentives for a proposed $10.1 billion solar cell manufacturing plant in Fort Bend County, adding another major project to its growing Texas industrial footprint. The proposed facility would further expand Tesla’s manufacturing presence in the state while supporting its broader push into energy and advanced technology manufacturing.
Project Factsheet: Terafab Chip Factory
Project: Terafab Advanced Manufacturing Campus
Location: Grimes County, Texas
Companies involved: SpaceX, Tesla and xAI
Initial investment: More than $16.8 billion
Potential total investment: Up to $119 billion across multiple phases
Planned size: 100 million square feet
First-phase jobs: Approximately 3,000
Production target: Up to 1 terawatt of compute hardware annually
Manufacturing: Logic, memory, wafer fabrication, advanced packaging and system-level integration
Key technology partner: Intel
Tesla applications: AI5 and AI6 chips, Full Self-Driving and Optimus
SpaceX applications: AI computing and planned orbital computing infrastructure
Texas support: $30 million Texas Enterprise Fund grant and JETI qualification
Development model: Multi-phase semiconductor manufacturing campus
Latest milestone: SpaceX and Tesla announced more than $16.8 billion for the first phase on August 6, 2026.
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