Tesla and SpaceX will jointly invest $16.8 billion in an initial phase of "Terafab," a massive semiconductor manufacturing complex planned for Grimes County, Texas, aimed at supplying chips for humanoid robots, autonomous vehicles and space-based data centers.
The companies announced the project Thursday, with the initial investment figure down from an earlier $25 billion estimate floated in March. Terafab is planned to span more than 100 million square feet in a site about an hour northwest of Houston — a scale the companies say would make it the largest chip-manufacturing facility on the planet. "Both Tesla & SpaceX will need far more chips than current & future global production can supply," the companies said, citing a goal of producing more than one terawatt of compute per year.
The complex is designed for full vertical integration — manufacturing, packaging and testing of advanced logic and memory chips — to supply Tesla's Optimus humanoid robots, its Cybercab autonomous vehicles and edge-computing hardware, as well as SpaceX's planned space-based data centers. The project is expected to create at least 3,000 jobs, with most positions to be filled by local hires from Grimes and neighboring Brazos County, and Texas has extended a $30 million Texas Enterprise Fund grant to SpaceX in support of the build-out.
Filings suggest the companies could ultimately invest as much as $119 billion across multiple expansion phases, with Intel also reported to be contributing to the broader initiative. The facility's water needs will be drawn from the nearby Gibbons Creek Reservoir rather than local groundwater, an arrangement the companies say addresses community concerns about water use in the region.
The project underscores how thoroughly Elon Musk's companies have moved to secure their own chip supply chains rather than compete for capacity with other AI-hungry buyers, following years of industry-wide semiconductor shortages that slowed production timelines across the auto and tech sectors. If Terafab scales to its full projected size, it would represent one of the largest single manufacturing investments in Texas history, adding to a wave of chip-fabrication announcements nationally as companies race to secure domestic production capacity for AI-era hardware.
