On August 6, 2026, Texas Governor Greg Abbott announced that SpaceX and Tesla will jointly construct a vertically integrated semiconductor fabrication plant in Grimes County, located northwest of Houston.
Here is a factual overview of the proposed project, known as Terafab.
The Announcement
The initial phase of the Terafab project represents a capital investment of more than $16.8 billion from the two companies. The facility is expected to create 3,000 new jobs for the region. The project is receiving support from the state, including a $30 million Texas Enterprise Fund grant, and it qualifies for the state’s Jobs, Energy, Technology, and Innovation (JETI) program.
The Scale of the Facility
The planned scale of Terafab is substantial. Once fully built, the manufacturing complex is designed to cover 100 million square feet of floor space. At this size—which is roughly equivalent to more than 1,700 American football fields—it would officially become the largest building in the world by floor area. To put the physical footprint into perspective, it will be approximately 10 times larger than Tesla’s existing Giga Texas facility in Austin.
The Purpose
The primary purpose of Terafab is to consolidate the production, advanced packaging, and testing of advanced logic and memory devices into a single location. The facility aims to produce more than one terawatt of artificial intelligence computing capacity per year to meet the internal demands of Elon Musk’s companies.
The microchips and processors manufactured at the Grimes County plant will power several distinct technologies, including:
- Hardware for Tesla’s Optimus humanoid robots and self-driving Cybercabs.
- High-power chips engineered to run SpaceX’s space-based data centers.
By bringing this manufacturing process entirely in-house under one roof, the companies intend to bypass existing suppliers and accelerate the development of the specialized computing hardware required for their aerospace and autonomous systems.
What’s Next?
While the Grimes County location was just unveiled on August 6, this has been in the works for a bit. Earlier this year, Tesla broke ground on a smaller research fab down in Austin that is serving as a precursor to the Terafab project.
As of right now, SpaceX and Tesla haven’t dropped an official completion date or a target for when the first Texas-made chips will roll off the line.
