SpaceX and Tesla to Invest $16.8 Billion in Terafab, the World's Largest Semiconductor Manufacturing Facility in Texas

SpaceX and Tesla have announced the construction of Terafab, a next-generation semiconductor manufacturing facility in Grimes County, Texas, backed by an estimated $16.8 billion initial capital investment.

The project marks one of the largest advanced manufacturing investments announced in Texas and aims to strengthen domestic semiconductor production as demand for artificial intelligence, high-performance computing, and space technologies continues to outpace global chip supply.

Terafab will integrate advanced logic manufacturing, memory production, advanced packaging, and testing within a single vertically integrated campus, significantly accelerating the deployment of next-generation computing technologies.

According to the companies, the combined computing demand from SpaceX and Tesla is expected to exceed one terawatt (TW), substantially surpassing today's global semiconductor production capacity.

The facility is planned to include more than 100 million square feet of manufacturing space, making it one of the largest semiconductor production complexes ever conceived.

Terafab will manufacture advanced chips optimized for AI inference and edge computing applications, supporting Tesla's Optimus humanoid robots, autonomous Cybercabs, and high-performance processors designed for SpaceX's space-based data centers.

Texas continues to attract advanced manufacturing

The announcement further reinforces Texas' position as one of the fastest-growing advanced manufacturing hubs in the United States.

SpaceX highlighted that its Texas operations—including Starbase, Bastrop, and McGregor—have become central to the company's long-term growth strategy.

Since 2024, SpaceX's footprint across Texas has generated more than 56,000 direct and indirect jobs, produced an estimated $28 billion in economic impact, and contributed hundreds of millions of dollars in indirect tax revenue.

Thousands of jobs and long-term investment

The initial phase of Terafab is expected to require approximately $16.8 billion in combined investment from SpaceX and Tesla, while future expansion phases could substantially increase the total value of the project.

The semiconductor facility will create at least 3,000 jobs, with hiring focused on residents from Grimes County and neighboring Brazos County, following SpaceX's existing model in Texas, where between 60% and 80% of new employees are hired locally.

Beyond direct employment, the project is expected to generate significant opportunities for construction firms, industrial suppliers, skilled trades, contractors, and workforce development initiatives through partnerships with local schools and training organizations.

Sustainability at the core

SpaceX and Tesla said the project will incorporate sustainability measures, including industrial use of water from Gibbons Creek Reservoir, on-site wastewater treatment, water recycling systems, and environmental compliance programs designed to exceed regulatory standards.

Building the future of semiconductor manufacturing

The companies believe that continued leadership in artificial intelligence, aerospace, secure communications, and advanced manufacturing depends on expanding domestic semiconductor production.

By developing Terafab, SpaceX and Tesla aim to establish the world's largest semiconductor manufacturing facility, reinforcing U.S. technological competitiveness while supporting the next generation of AI, autonomous systems, and space exploration.