SpaceX and Tesla launch $16.8 bn Terafab AI chip megafactory in Texas

SpaceX and Tesla announced the construction of an advanced AI semiconductor complex, dubbed Terafab, in Grimes County, Texas. The first phase will cost about $16.8 billion, cover more than 100 million square feet and create at least 3,000 high‑paying jobs. The vertically integrated plant will produce logic and memory chips for Tesla’s Optimus humanoid robots (about 25% of output) and for SpaceX’s orbital data‑center and spacecraft projects (about 75%).

The Texas Enterprise Fund is providing a $30 million performance grant and additional tax incentives, while the state contributed $27 million to the project. To ensure a stable power supply, SpaceX will build on‑site natural‑gas power plants and large battery‑storage systems. Intel has joined as a design and packaging partner. Local residents have raised concerns about water use and environmental impact, but SpaceX says the facility will not deplete local water sources or raise electricity rates.

The megafactory is positioned as a strategic move to reduce reliance on external chip suppliers and to meet a projected demand of over one terawatt of AI compute power across Musk’s enterprises.