Michael Gonzalez/The Texas Tribune
The joint Terafab facility in Grimes County would be five times larger than the current record holder for the world's biggest building, with investment potentially reaching $119 billion.
Elon Musk’s two flagship companies are building a semiconductor factory so large it makes every other building on Earth look like a studio apartment.
SpaceX and Tesla announced plans for a joint chip manufacturing facility in Grimes County, Texas, spanning over 100 million square feet. The project, dubbed Terafab, carries an initial price tag of $16.8 billion, with a potential full buildout cost ballooning to $119 billion.
A factory that redefines scale #
The plant will focus on producing AI-optimized logic and memory chips designed for Tesla’s autonomous vehicle ambitions, its Optimus humanoid robots, Cybercab robotaxis, and SpaceX’s space-centric data operations.
The production target is approximately 1 terawatt of compute capacity annually.
Texas Governor Greg Abbott threw his support behind the project, which secured local governmental approval for tax incentives. The facility is expected to generate at least 3,000 jobs in the region.
Why vertical integration matters here #
Tesla already designs its own inference chips for Full Self-Driving hardware, and its Dojo supercomputer project represented an early attempt at building custom AI training silicon. But manufacturing those designs has always depended on third-party foundries, primarily TSMC in Taiwan.
Intel has been mentioned in connection with process technology contributions to the project, though the specifics of any collaboration remain undefined.
The initiative aligns with the broader US push to reshore semiconductor manufacturing. The CHIPS and Science Act already funneled billions toward domestic fab construction, with TSMC, Samsung, and Intel all building or expanding US facilities.
Not everyone is celebrating #
Local residents in Grimes County have raised concerns about environmental impact, particularly water consumption. The facility plans to source water from Gibbons Creek Reservoir.
The $119 billion full buildout figure would make Terafab one of the largest single capital expenditure projects in industrial history. For context, TSMC’s total planned investment across its Arizona fabs is around $65 billion.
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