Archive · 10 Aug 2026
Musk's Tesla and SpaceX Building $16.8 Billion Texas Chip Factory
Elon Musk has two very big companies, Tesla and SpaceX.
These companies are working together to build a giant new factory in Texas.
The factory is called Terafab, and it will make computer chips.
Computer chips are like the brains of computers, cars, and robots.
The first part of the project will cost about $16.8 billion and employ at least 3,000 people.
If everything goes well, the whole project could grow and cost up to $119 billion.
The chips will be used in Tesla cars, in a human-shaped robot called Optimus, and in SpaceX's space computers.
Today, chips are usually made in different countries, but this factory will do everything in one place.
Water for the factory will come from a nearby lake called Gibbons Creek Reservoir.
The state of Texas is also giving SpaceX $30 million to help with the expansion.
Tesla and SpaceX confirmed that Terafab, their jointly developed semiconductor complex, will be built in Grimes County, Texas, about an hour northwest of Houston.
The first phase carries an investment of $16.8 billion and a planned workforce of at least 3,000.
The site's total footprint is projected to exceed 100 million square feet, and future phases could push cumulative investment to as much as $119 billion.
Terafab will combine logic manufacturing, memory production, packaging, and testing on one site to produce AI chips for Tesla vehicles, the Optimus humanoid robot, and SpaceX computing systems.
Texas Governor Greg Abbott's office extended a $30 million Texas Enterprise Fund grant to SpaceX, and the facility will source water from Gibbons Creek Reservoir rather than local groundwater.
- Who
- Tesla and SpaceX, Elon Musk's two largest companies, with a state grant extended by Texas Governor Greg Abbott's office.
- What
- Building Terafab, a jointly developed semiconductor manufacturing complex that combines logic manufacturing, memory production, packaging, and testing on a single site.
- When
- No specific date was given; the first phase of the project has been announced and sited.
- Where
- Grimes County, Texas, roughly an hour northwest of Houston and two hours from Gigafactory Texas.
- Why
- To produce AI chips at scale for Tesla vehicles, the Optimus humanoid robot, and SpaceX computing systems, removing reliance on external foundries.
- Project
- Terafab semiconductor manufacturing complex
- Companies
- Tesla and SpaceX
- Location
- Grimes County, Texas
- First-phase investment
- $16.8 billion
- Projected cumulative investment
- Up to $119 billion
- Planned workforce
- At least 3,000
- Water source
- Gibbons Creek Reservoir
- State grant
- $30 million Texas Enterprise Fund grant to SpaceX