Tesla and SpaceX invest $16.8B in Texas Terafab chip factory

Tesla and SpaceX announced on August 6, 2026, that they will jointly build an advanced chip factory called Terafab in Grimes County, Texas, with an initial investment of $16.8 billion. The facility is planned to be the largest building on Earth, with over 100 million square feet of manufacturing space, according to SpaceX.

The project will employ at least 3,000 people from Grimes and nearby Brazos County. Elon Musk, CEO of both companies, described Terafab as "the largest and most valuable building on Earth by far" in a post on August 6, 2026.

Terafab aims to bridge the gap between current global chip supply and future compute demand, driven by Musk's vision of millions of robots, robotaxis, and space-based data centers. SpaceX has indicated in filings that it may spend up to $119 billion on the project across multiple phases, though the company did not discuss Terafab on its first earnings call earlier that week.

The factory will be a vertically integrated facility handling manufacturing, packaging, and testing of advanced logic and memory devices. It will produce chips optimized for edge computing and inference for products like Tesla's Optimus robots and self-driving Cybercabs, as well as high-power chips for SpaceX's space-based data centers. Intel has said it will contribute to the project, but has been vague about its exact role.

SpaceX committed to using water from the local Gibbons Creek Reservoir instead of groundwater. The announcement followed a county meeting on August 5, 2026, where hundreds of residents raised concerns about tax breaks and transparency. Anderson-Shiro Consolidated Independent School District Superintendent Dr. Sarah Borowicz said in a statement that the agreement would strengthen the district and expand opportunities for students.

The companies emphasize that Terafab will enable fast, recursive improvements and accelerate new compute deployment. SpaceX's website states the facility is designed to build new compute at an unprecedented scale and speed.