TLDR
- SpaceX and Tesla will invest $16.8 billion in the first phase of Terafab, a chip manufacturing complex in Grimes County, Texas
- The facility is a joint venture between the two Elon Musk companies, with manufacturing support from Intel
- Total costs across all phases could exceed $119 billion
- Terafab will cover 100 million square feet and is expected to create 3,000 high-paying jobs
- Texas is offering a $30 million enterprise grant and tax abatements to support the project
Elon Musk’s two major companies, SpaceX and Tesla, have confirmed they will jointly invest $16.8 billion to build Terafab, an advanced chip manufacturing facility in Grimes County, Texas. Texas Governor Greg Abbott joined both companies to make the announcement official on August 6.
Terafab will be built in Grimes County, Texas
In April, we broke ground on our research fab on the North Campus of Giga Texas – the precursor to Terafab.
Both Tesla & SpaceX will need far more chips than current & future global production can supply.
This is why we're building… pic.twitter.com/je4jKXuQrY
— Tesla (@Tesla) August 6, 2026
The project is structured as a formal joint venture between SpaceX and Tesla. Intel is also involved as a manufacturing partner. The two Musk companies plan to split the facility’s output to serve their individual needs.
Terafab is designed to handle every step of chip production under one roof, including chip design, logic, memory, and packaging. This vertically integrated approach is uncommon in the semiconductor industry.
Why Musk Is Building His Own Chips
SpaceX and Tesla project that they will need more than one terawatt of computing power annually to operate their products and services. That includes Optimus robots, Cybercabs, and orbital data networks run by SpaceX.
Current global chip output cannot meet that level of demand. By building Terafab, Musk is looking to close that gap without relying on outside suppliers.
Tesla broke ground in April on a smaller research fab at its Giga Texas plant in North Campus. That facility is considered a precursor to the full Terafab project.
What the Project Involves
The first phase carries a price tag of $16.8 billion. Analysts believe the total investment across all phases of construction could eventually top $119 billion.
The facility is planned at 100 million square feet, which would make it one of the largest manufacturing plants in the world. It is expected to create 3,000 jobs, with a focus on hiring from Grimes and Brazos counties.
Texas is backing the project with a $30 million Texas Enterprise Fund grant. The state has also approved tax abatements for the site.
SpaceX shares rose 2.22% on the day of the announcement. Tesla shares were down 0.75%.
Space Exploration Technologies Corp., SPCX
The joint venture allows both companies to pool resources and share the high upfront costs of semiconductor manufacturing. Terafab’s output will serve both terrestrial applications like robotics and space-based data infrastructure.
Musk has said bringing chip production in-house is essential for his companies to meet their future computing needs. No timeline has been given yet for when Terafab is expected to be fully operational.
The $16.8 billion first-phase investment makes Terafab one of the largest announced chip manufacturing commitments in the United States.
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