SpaceX & Tesla to build $16.8bn Terafab
SpaceX and Tesla commit $16.8bn to build 'Terafab' chip megafactory in Texas
SpaceX and Tesla confirmed on 6 August 2026 that 'Terafab', the advanced chip factory the two Elon Musk companies are jointly developing, will be built in Grimes County, Texas, north-west of Houston. The partners committed an initial investment of $16.8 billion, with future expansion phases expected to push the total figure far higher.
The project is designed to close the gap between global chip supply and the more than 1 terawatt of computing power SpaceX and Tesla expect to need in the coming years. Musk described the plant as set to become 'the largest and most valuable building on Earth by far', with more than 100 million square feet of manufacturing space planned.
Terafab will be vertically integrated, housing manufacturing, packaging and testing of advanced logic and memory devices under one roof. SpaceX says co-locating these steps will enable fast, recursive process improvements and accelerate the rate at which new compute can be deployed.
Output is earmarked for two distinct end markets: chips optimised for edge computing and inference in hardware such as Tesla's Optimus humanoid robots and self-driving Cybercabs, and high-power devices designed to operate SpaceX's planned space-based data centres.
The facility is expected to employ at least 3,000 people drawn from Grimes County and neighbouring Brazos County. Musk said the Terafab is 'bringing cutting-edge manufacturing to America, creating thousands of high-paying jobs in the Lone Star State, and enabling us to produce AI chips at scale for use on Earth and in space.'
Earlier regulatory filings indicated SpaceX alone could spend as much as $119 billion on the project across a multi-phase construction plan. Intel has separately confirmed it will contribute to Terafab, though it has not detailed the scope of its involvement.
On utilities, SpaceX said it is committing to draw process water from the local Gibbons Creek Reservoir rather than tapping local groundwater — a notable concession in a region where water availability is a live issue for large industrial loads.
The announcement follows months of speculation and site scouting across Texas, and lands as Musk tightens the integration of AI efforts across his companies after SpaceX's acquisition of xAI and its June IPO.
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