SpaceX and Tesla confirm Terafab chip factory location in Texas

SpaceX and Tesla have confirmed Grimes County, Texas as the permanent home for Terafab, a multibillion-dollar semiconductor manufacturing venture involving Tesla, SpaceX, xAI and Intel. The project targets 1 terawatt of annual AI compute capacity at full scale, roughly double current U.S. semiconductor output, addressing a bottleneck both companies cite as critical to their AI and autonomous vehicle ambitions. Terafab's first phase alone could cost 55 billion, with total spending potentially reaching 119 billion across all phases. Foundation preparation begins immediately, with renderings expected within days and construction to follow within months. The site selection followed a 10 million payment from SpaceX that satisfied a tax abatement deadline set in June.

1. SpaceX and Tesla confirmed Grimes County, Texas as the permanent site for Terafab on August 6, 2026.
2. Terafab brings together three of Elon Musk's companies (SpaceX, Tesla, xAI) along with Intel Corp.
3. First phase estimated cost: 55 billion; total potential spending up to 119 billion across all phases.
4. At full scale, Terafab targets 1 terawatt of annual AI compute capacity using Intel's 14A process.
5. SpaceX chose the Gibbons Creek Reservoir site for rainwater storage capacity and proximity to Houston's labor pool (15.9 million people within three hours).
6. The facility will be powered by its own natural gas plants rather than drawing from the ERCOT grid.
7. A prototype fab is already underway at Tesla's Giga Texas campus in Austin.