SpaceX and Tesla commit $16.8 billion to 'Terafab' chip plant in Texas

SpaceX and Tesla will invest an initial $16.8 billion to build a vertically integrated semiconductor plant called Terafab in Grimes County, Texas, Governor Greg Abbott’s office said on August 6, 2026.

The plant is slated to span more than 100 million square feet of planned manufacturing space and create at least 3,000 jobs, the governor’s office said, backed by a $30 million Texas Enterprise Fund grant. Terafab is intended to produce chips for Tesla’s Optimus humanoid robots, its Cybercab robotaxis and SpaceX’s planned space-based data centers, tying two of Elon Musk’s companies to their own silicon supply.

Under its agreements with Grimes County, SpaceX must invest at least $5 billion by 2030 and create 1,800 jobs by 2035, and will pay the county $20 million a year for 35 years, or $710 million in total. A May 2026 filing had floated SpaceX’s proposed total investment across expansion phases as high as $119 billion; the $16.8 billion figure is the initial commitment.

Musk, who leads both companies, said “the foundations for the most exciting future are being built right here in Texas,” and separately called the facility “the largest and most valuable building on Earth by far.” Intel has been reported as a contributing partner on the project, though the announcement did not detail its role.

Chip fabs routinely slip between groundbreaking and first production, and the gap between a $16.8 billion opening commitment and a $119 billion build-out leaves years of execution risk. The near-term test is whether SpaceX hits the investment and hiring floors its county deal sets.