Tesla and SpaceX have confirmed plans for the first phase of their joint Terafab semiconductor fabrication facility. The project is located in Grimes County, Texas. The companies announced an initial investment of 16.8 billion dollars for this stage of construction.
Elon Musk, chief executive of both Tesla and SpaceX, described the completed Terafab as the largest and most valuable building on Earth. The full facility is planned to cover more than 100 million square feet of manufacturing space. Musk stated that Terafab will be 50 times the size of the Pentagon when finished.
A research and prototype fab related to the project broke ground in April 2026 on the north campus of Tesla’s Gigafactory Texas near Austin. That smaller facility is intended to test ideas and produce a limited number of wafers each month. Tesla is leading work on the research fab while SpaceX is handling the initial portion of the large scale Terafab.
The Grimes County site will house a vertically integrated operation that includes chip design, fabrication, packaging, and testing under one roof. The facility will use Intel’s 14A manufacturing process. Production is aimed at advanced AI chips. One type is optimized for edge computing and inference in Tesla vehicles, Optimus humanoid robots, and Cybercab robotaxis. Another type is designed as high power processors for SpaceX space-based data centers.
The companies state that their combined demand for chips will exceed one terawatt of compute capacity per year. This level is higher than current global supply. The Terafab is expected to employ at least 3,000 people, with a majority of positions filled by residents of Grimes County and nearby Brazos County.
Civil work and foundations at the Grimes County location are set to begin soon. Full construction is expected to start within months. The initial 16.8 billion dollar phase is scheduled to run through 2026 to 2028. Later phases of the multi stage buildout are planned to continue into the early 2030s. The project has received local tax abatements and state economic incentives. Water for industrial use will come from the Gibbons Creek Reservoir.
