Tesla and SpaceX Announce $16.8 Billion Terafab Semiconductor Plant in Texas

Massive Chip Factory Announced

Tesla and SpaceX are joining forces on a semiconductor manufacturing complex called Terafab in Grimes County, Texas, with an initial investment of $16.8 billion and plans to manufacture memory and logic chips for Tesla vehicles and Optimus robots as well as SpaceX computing systems.

Vertical Integration at Unprecedented Scale

The facility will span more than 100 million square feet of manufacturing space, housing the full vertical integration of chip manufacturing, packaging, and testing of advanced logic and memory devices. The project aims to consolidate every stage of semiconductor production including chip design, fabrication, memory production, advanced packaging, and testing under one roof. This represents a striking attempt to bring chip production entirely in-house rather than depending on global suppliers and foundries.

Strategic Necessity and Jobs

The first phase of the project represents a capital investment of more than $16.8 billion from Tesla and SpaceX and will create 3,000 new jobs. The site sits in Grimes County, about an hour northwest of Houston, on land next to the Gibbons Creek Reservoir, which once cooled a coal plant and will now supply water to the fab. The companies say existing global semiconductor production cannot meet their accelerating AI and robotics computing demands.

Location and Future Expansion

TERAFAB will be built in Grimes County, Texas, located roughly an hour northwest of Houston and two hours from Gigafactory Texas. Terafab will combine logic, memory, packaging, and testing under one roof, producing chips for Tesla's Optimus robots and Cybercabs and for space-based data centers SpaceX wants to launch. The announcement signals a major shift toward vertical integration as AI and robotics push semiconductor demand to record levels.