Terafab

Semiconductors · AI Infrastructure · Manufacturing

Expansion

Tesla and SpaceX confirm $16.8B Terafab chip megafactory in Texas

The project leans on Intel's struggling foundry business to actually build the chips, undercutting Musk's self-sufficiency pitch.

• Tesla and SpaceX confirmed an initial $16.8 billion investment to build 'Terafab,' a joint chip factory in Grimes County, Texas, outside Houston.
• The vertically integrated site will handle manufacturing, packaging and testing of advanced logic and memory chips for Tesla's Optimus robots and Cybercabs, and for SpaceX's space-based data centers.
• At over 100 million square feet, SpaceX calls it the largest and most valuable building on Earth, with a workforce of at least 3,000, mostly local hires.
• The $16.8B is only the first phase; SpaceX has told regulators total spending could reach as much as $119 billion across a multi-phase build.
• Intel is contributing design, fabrication and packaging expertise since Tesla has never produced a semiconductor wafer, making Terafab a critical anchor customer for Intel Foundry, which lost $10.32 billion in 2025.
• Tesla and SpaceX estimate their combined future compute demand will exceed 1 terawatt, more chip capacity than currently exists globally.
• Texas extended a $30 million Texas Enterprise Fund grant for the project, which follows a county meeting where residents raised concerns about tax incentives and transparency.
• Terafab marks Musk's boldest bet yet on vertically integrating chip supply across his companies, arriving as rivals like TSMC pour $165 billion into US fabs to meet the same AI-driven demand.