$16.8 Billion First Phase Planned in Texas
The first phase of Terafab represents more than $16.8 billion in capital investment and is expected to create 3,000 jobs. The state described the project as a vertically integrated semiconductor fabrication plant to be constructed by SpaceX in Grimes County.
Plans call for a facility covering about 100 million square feet, substantially larger than a conventional semiconductor fabrication plant. The project is intended to bring logic-chip production, memory and advanced packaging into the same manufacturing system rather than treating them as entirely separate operations. The official Terafab website describes the project as a factory designed to combine those functions under one roof.
Texas has also extended a $30 million Texas Enterprise Fund grant to SpaceX, while the project qualifies under the state’s Jobs, Energy, Technology and Innovation program, known as JETI. The incentives place Terafab within Texas’ broader effort to attract large industrial and technology investments, although the public support represents only a fraction of the capital required for the proposed complex.
Expanding Internal AI Chip Production
Terafab is closely tied to the growing computing requirements of Tesla, SpaceX and xAI. The facility is being developed to produce chips for both terrestrial and space applications, including processors for Tesla’s Full Self-Driving systems and Optimus humanoid robots, as well as hardware designed for orbital computing.
SpaceX disclosed in an SEC filing that it announced a collaboration with Tesla in March 2026 to develop Terafab, with a long-term goal of producing one terawatt of compute hardware annually. SpaceX framed the project as part of an effort to build semiconductor manufacturing capacity alongside the companies’ expanding AI operations.
The strategy does not mean the companies expect to eliminate outside suppliers. SpaceX’s SEC disclosures indicate that third-party semiconductor and computing hardware providers will remain important even as Terafab develops. That leaves the project positioned more as an expansion of internal capacity and supply-chain control than a complete replacement for established chip manufacturers.
Multiphase Plans Could Reach $119 Billion
The $16.8 billion first phase is only one part of what has been outlined for the site. An application filed through the Texas Comptroller’s JETI program describes Terafab as a planned semiconductor fabrication project with four potential phases and combined investment reaching as much as $119 billion.
Additional state documentation describes expected investment for initial phases as ranging between $55 billion and $119 billion, with further long-term expansion also contemplated.
Musk has characterized Terafab in unusually ambitious terms, including describing it as capable of becoming the largest and most valuable building in the world. The physical scale envisioned for the project is supported by the 100-million-square-foot development plan, but claims about its eventual value remain projections rather than independently established facts.
