SpaceX and Tesla (NASDAQ: TSLA) have jointly announced the construction of a massive semiconductor manufacturing facility called Terafab, to be built in Grimes County, Texas, just north of Houston.
SpaceX revealed on August 6 that the Terafab facility will manufacture new computer chips at what the company describes as an “unprecedented scale and speed.”
The initial phase of the project represents a $16.8 billion capital investment from both SpaceX and Tesla, with potential future expansion phases already under consideration.
The facility will span more than 100 million square feet of manufacturing space, housing the full vertical integration of chip manufacturing, packaging, and testing of advanced logic and memory devices.
Terafab is expected to employ at least 3,000 people, with a significant portion of those jobs expected to be drawn from Grimes County and neighboring Brazos County.
The chips produced at the facility are intended for use in Tesla’s Optimus robots and self-driving Cybercabs, as well as high-power chips designed to support SpaceX’s space-based data centers.
Elon Musk, founder and CEO of SpaceX and CEO of Tesla, said in a statement, “The foundations for the most exciting future are being built right here in Texas, 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.”
Texas Gov. Greg Abbott praised the announcement, confirming that a $30 million Texas Enterprise Fund grant has been extended to SpaceX to support the development of the facility.
Abbott said in a statement, “The first-of-its-kind Terafab facility will accelerate chip production in Texas at an unprecedented scale, create thousands of good-paying jobs in Grimes County, and expand economic opportunity for generations of Texans across Southeast Texas and beyond.”
Terafab has also been designated as a qualified project under the Texas Jobs, Energy, Technology, and Innovation program, a 2023 initiative designed to attract large, capital-intensive economic development projects with transparency requirements.
SpaceX cited Grimes County’s infrastructure access, available land, and proximity to major Texas markets as key factors driving the site selection for the long-term industrial investment.
The company also plans to collaborate with local schools and workforce partners to build pipelines for future employment tailored to the needs of individual communities near the facility.
Sarah Borowicz, superintendent of Anderson-Shiro Consolidated Independent School District, one of the school districts set to be impacted, said, “We believe this agreement will strengthen our district, expand opportunities, and better prepare our students for their future.”
SpaceX’s existing Texas footprint includes its Starbase launch facility, a Starlink factory in Bastrop, and a rocket development and test site in McGregor.
Since 2024, SpaceX has reported generating more than 56,000 direct and indirect jobs across Texas, with an estimated economic impact exceeding $28 billion and hundreds of millions in indirect tax contributions.
