Tesla and SpaceX announced on August 6 that their joint semiconductor megafactory Terafab will be built in Grimes County, Texas, near Houston. The companies will invest an initial $16.8 billion in the project, which is designed to be the world's largest semiconductor manufacturing facility at more than 100 million square feet. The site will combine logic, memory, packaging and testing under one roof—a fully vertically integrated fab.
The two companies project combined demand for over 1 terawatt of compute annually, far exceeding current and projected global chip production capacity. Terafab aims to produce chips tailored to Tesla's Optimus robots, Cybercabs and autonomous vehicles, as well as SpaceX's space-based data centers. The project will employ at least 3,000 people from Grimes and Brazos counties. Grimes County approved full property tax abatement in June; ground work has already begun on a prototype research fab at Tesla's Giga Texas site.
The $16.8 billion is described as the initial phase, with SpaceX filings referencing much higher total investment across multiple construction phases. Intel announced in April it will contribute manufacturing expertise; Musk has indicated Intel's 14A (1.4 nm) process will be used when the full fab scales. Construction started less than five months after the project's public announcement in March 2026, a pace Musk highlighted as demonstrating execution capability against the scale of the ambition.