SpaceX and Tesla have announced project Terafab, a new semiconductor manufacturing complex in Grimes County, Texas, described by the companies as the largest chip factory in the world. The facility will combine the full semiconductor production cycle on a single site, from logic microchips and memory manufacturing to final packaging and testing. The companies said this unified site will significantly accelerate the development and market launch of new processors.
The complex will cover approximately 9.3 million square meters, which is roughly equal to 1,300 football fields, making Terafab one of the largest industrial sites in the world. SpaceX and Tesla said vertical integration across all manufacturing stages will help them refine technology faster and shorten production timelines for new chips.
Specialized processors for edge artificial intelligence computing and inference tasks will serve as the primary output of the facility. The companies plan to use these processors in Tesla Optimus humanoid robots, Cybercab autonomous taxis, and high-performance computing systems for SpaceX space data centers.
SpaceX and Tesla estimate their combined demand for computing power will exceed 1 terawatt in the coming years, far higher than current global semiconductor supply. Although both companies continue to work with existing suppliers, they stated that the industry cannot fully meet future demand, driving their decision to build an in-house manufacturing base.
Phase One Investment and Environmental Plans
The first construction phase will require an investment of about $16.8 billion. The facility aims to create at least 3,000 jobs, with plans to hire heavily from Grimes County and neighboring communities while partnering with local colleges to train workers.
Environmental management is a major focus for the new complex. Rather than using local underground sources, the site will draw water from the Gibbons Creek reservoir. The facility will also feature custom wastewater treatment facilities, water reuse systems, and chemical waste handling compliant with environmental regulations.
Terafab forms part of a broader strategy by SpaceX and Tesla to expand high-tech manufacturing within the United States. According to SpaceX, its operations in Texas have already generated over 56,000 direct and indirect jobs and contributed more than $28 billion to the regional economy since 2024.
