AUSTIN, Texas — Tesla and SpaceX confirmed Thursday that Terafab, the advanced semiconductor factory the two companies are building together, will rise in Grimes County, Texas, about an hour northwest of Houston, anchored by an initial $16.8 billion investment.
Elon Musk, who leads both companies, called it "the largest and most valuable building on Earth by far" in a post on X, adding that the finished campus "will be stunningly beautiful." The scale is hard to overstate: SpaceX says the facility will span more than 100 million square feet of manufacturing space and employ at least 3,000 people from Grimes and neighboring Brazos County, details first reported by TechCrunch.
One Roof, Every Step
Terafab is designed to collapse the usual sprawl of chipmaking into a single campus, handling logic and memory manufacturing, packaging, and testing all in one place. SpaceX says that vertical integration will "enable fast, recursive improvements and accelerate new compute deployed." It is the same playbook Tesla has run to speed up its own products, from Megapacks to the Cybertruck, where the company recently swapped the pickup's underbody to carbon fiber to trim cost and add strength.
The chips have a clear job. Terafab will turn out parts optimized for edge computing and inference for Tesla's Optimus robots and self-driving Cybercabs, alongside high-power silicon built to run SpaceX's planned space-based data centers.
A Multi-Phase Bet
The $16.8 billion figure covers only the first phase. SpaceX has signaled in filings that total spending across the multi-phase build could reach as much as $119 billion, and Intel has signed on as a manufacturing partner. Musk first unveiled Terafab in March as a joint Tesla-SpaceX-xAI venture aimed at producing more than a terawatt of AI compute per year, a scale that dwarfs today's entire global chip output.
Texas is rolling out the welcome mat. Governor Greg Abbott's office confirmed the expansion Thursday, and the project qualifies under the state's Jobs, Energy, Technology and Innovation program. SpaceX said it will draw water from the nearby Gibbons Creek Reservoir rather than local groundwater and build its own natural gas plants to power the site instead of leaning on the ERCOT grid.
Building the Compute Era
For Musk's companies, Terafab is the connective tissue between hardware ambitions that once looked unrelated. The same silicon can steer a Cybercab through traffic, give an Optimus robot the reflexes to work a factory line, and crunch AI models in orbit. That AI-and-robotics thesis is one Musk has put at the center of Tesla's story on recent earnings calls.
Civil work and foundation prep are expected to begin within months. If Terafab delivers even a fraction of its billed capacity, it could dramatically shorten the path from Musk's boldest ideas to shipping products, on the road, on the factory floor, and in space.
