Tesla and SpaceX confirm $16.8bn Terafab chip campus in Texas

Tesla and SpaceX, both run by Elon Musk, confirmed on 6 August 2026 that they will build Terafab, a semiconductor manufacturing campus in Grimes County, Texas, about an hour north-west of Houston.

Tesla and SpaceX said the first phase will cost $16.8 billion, far below the roughly $55 billion first-phase figure discussed in county filings in May. Total investment across all phases could reach $119 billion, according to those filings.

The companies said the site will exceed 100 million square feet of manufacturing space and create at least 3,000 jobs. Musk has called it the largest and most valuable building on Earth, and it would be more than twice the size of Tesla's 2,500-acre Austin site.

Terafab will handle logic, memory, packaging and testing in-house, producing two custom 2-nanometre chip families, according to the companies. One line will supply Tesla cars and Optimus humanoid robots; the other will supply SpaceX satellites intended for orbital data centres.

The campus will draw water from the Gibbons Creek Reservoir, which previously cooled a coal plant that closed in 2018.

Texas is backing the project through its JETI programme, a $30 million Texas Enterprise Fund grant and a 10-year, 100% local tax abatement. In return, SpaceX will pay the county $20 million a year for 35 years, invest at least $5 billion by 2030 and create 1,800 full-time jobs by 2035.

Musk first unveiled Terafab in March in Austin as a joint venture involving Tesla, SpaceX and xAI. "We're now embarking on the most epic chip-building effort," Musk said, according to the Austin American-Statesman.

SpaceX has described the current plan as a framework rather than a binding commitment, according to TechCrunch. No construction start date has been set, and the split of intellectual property between Tesla and SpaceX has not been finalised.