SpaceX and Tesla Invest $16.8 Billion in Texas Terafab

SpaceX and Tesla announced an initial $16.8 billion investment to construct Elon Musk's Terafab, a vertically integrated semiconductor manufacturing complex in Grimes County, Texas. The facility will span over 100 million square feet—roughly 50 times the size of the Pentagon—and will handle the design, manufacturing, packaging, and testing of logic and memory devices. The project aims to meet a combined computing demand exceeding one terawatt, with 75% of the AI compute allocated to SpaceX's space-based data centers and the remainder supporting Tesla's Optimus robots and Cybercabs.

Governor Greg Abbott provided a $30 million Texas Enterprise Fund performance grant to support the project, which also qualifies under the Texas Jobs, Energy, Technology, and Innovation program. The first phase is expected to create 3,000 high-paying jobs for engineers and technicians, though SpaceX filings suggest total spending across multiple phases could reach $119 billion. Intel joined the project in April to provide expertise in fabrication and packaging.

To ensure energy reliability and avoid industry delays, SpaceX will construct its own natural gas-fired power plants and large battery arrays for energy storage. The facility will also draw water from the Gibbons Creek Reservoir. While local school districts have approved tax incentive agreements, some Grimes County residents have raised concerns regarding transparency and the tax breaks awarded to the project.