Tesla and SpaceX announce $16.8 billion Texas chip project

Tesla and SpaceX have announced a joint venture called Terafab to develop a massive semiconductor manufacturing complex in Texas. The first phase of the project involves an investment of over $16.8 billion, with total projected costs across four phases potentially reaching $119 billion. Elon Musk described the facility as the “largest and most valuable building on Earth.”

Located near the Gibbons Creek reservoir in Grimes County, the complex is designed to integrate chip manufacturing, memory production, advanced packaging, and testing. The facility aims to produce advanced AI chips for Tesla’s Optimus humanoid robots and Cybercab, as well as processors for SpaceX’s planned orbital AI satellite data centers. The companies seek to achieve a total computing capacity exceeding one terawatt.

The project is expected to create at least 3,000 jobs. Intel has also indicated it will participate as a partner in the Terafab initiative. To support the development, Texas Governor Greg Abbott announced a $30 million grant from the Texas Enterprise Fund, and Grimes County has approved property tax exemptions for the project.