SpaceX and Tesla plan to invest more than $16.8 billion in the first phase of Terafab, a massive semiconductor manufacturing complex they are jointly developing in Texas.
The facility will be “the largest and most valuable building on Earth by far,” Elon Musk, the CEO of both companies, wrote on Thursday in a post on X, which he also owns.
The factory will be built near Gibbons Creek Reservoir in Grimes County, about 100 miles from Tesla’s headquarters in Austin, and about 20 miles east of College Station, home of Texas A&M University.
The plan calls for 100 million square feet of manufacturing space. That’s about 10 times the size of Tesla’s Gigafactory Texas, a precursor to Terafab.
The companies promised to draw water for industrial operations from the reservoir rather than from local groundwater. They also said the project would create at least 3,000 jobs, including positions for engineers, technicians, and plant operators.
Terafab is intended to consolidate chip manufacturing, memory production, advanced packaging, and testing under one roof. It will produce advanced artificial intelligence (AI) chips for Tesla’s Optimus humanoid robots and self-driving Cybercab robotaxis, as well as processors designed for SpaceX’s planned satellite-based data centers.
Those satellites would perform AI computing in orbit, which SpaceX describes as the “only truly scalable solution for the future of AI,” highlighting abundant solar energy and fewer land, cooling, and regulatory constraints than terrestrial data centers.
SpaceX and Tesla expect their combined chip demand to exceed 1 terawatt of computing capacity, far surpassing the industry’s current global supply.
“We’re now embarking on the most epic chip-building effort,” Musk said in a statement.
The announced $16.8 billion investment represents only the project’s first phase. A filing in May outlined an initial investment of up to $55 billion, with the total potentially reaching $119 billion if additional phases are completed.
Intel has said it will contribute to the Terafab project as a partner.
The Terafab project further expands Musk’s footprint across Texas. SpaceX operates its Starbase rocket-manufacturing and launch complex near Boca Chica, produces Starlink hardware in Bastrop, and tests rocket engines in McGregor.
SpaceX moved its headquarters from California to Starbase in 2024. Tesla has been headquartered in Austin since 2021.
The project is receiving a $30 million Texas Enterprise Fund grant from the state, Gov. Greg Abbott said on Thursday. Grimes County has already approved waiving property taxes.
“Texas is where big ideas grow even bigger,” Abbott said in a statement. “I congratulate SpaceX on this significant expansion of their investment in our great state.”