How much will Terafab's first phase cost?

Tesla and SpaceX say the initial phase in Grimes County, Texas will cost $16.8 billion, down from the roughly $25 billion figure floated when the project was announced in March. SpaceX has said the full multi-phase build could eventually reach $119 billion.

Where exactly is Terafab being built?

In Grimes County, Texas, northwest of Houston, on the site of a former coal-fired power plant near the Gibbons Creek Reservoir.

Is Terafab actually guaranteed to be built?

Not yet. SpaceX’s own pre-IPO filings described the project as a “general framework” between the two companies with “no binding commitments,” and neither Tesla nor SpaceX has set a public production or completion date.

What will the chips made at Terafab be used for?

Tesla says it plans to use them in its Optimus humanoid robots and Cybercab robotaxis, while SpaceX intends to use them for compute in its planned orbital data centers.

Tesla, SpaceX Confirm $16.8B 'Terafab' Chip Plant Site in Texas

Tesla and SpaceX confirmed on August 6 that the first phase of “Terafab,” a semiconductor plant the two companies are building together, will rise in Grimes County, Texas, northwest of Houston. Texas Governor Greg Abbott’s office said the initial investment stands at $16.8 billion — down from the roughly $25 billion the companies floated for the same first phase when they teased the project in March.

The Grimes County site is projected to span more than 100 million square feet, which the companies describe as the largest chip-manufacturing facility ever attempted. The plant is meant to combine logic and memory chip fabrication with advanced packaging under one roof — output the companies say will supply Tesla’s Optimus humanoid robots and Cybercab robotaxis, plus compute for SpaceX’s planned orbital data centers. “The Terafab is bringing cutting-edge manufacturing to America, creating thousands of high-paying jobs in the Lone Star State,” Musk said in a statement released by the governor’s office.

Intel has separately been lined up to help operate the manufacturing side of the project, though neither company has detailed the terms. The site is expected to create at least 3,000 jobs and qualifies for a $30 million grant under Texas’s Jobs, Energy, Technology and Innovation program. SpaceX said it will draw water from the Gibbons Creek Reservoir, a former coal-plant cooling pond, rather than local groundwater, aiming to avoid the kind of water disputes that have followed other Texas data-center projects.

The announcement comes with caveats. SpaceX’s own filings ahead of its IPO described Terafab as a “general framework” between the companies with “no binding commitments” and no obligation for either side to keep participating, and neither company has set a public production or completion date for the Grimes County build-out. Tesla, meanwhile, already sources AI chips elsewhere: Samsung’s Taylor, Texas fab produces its current AI5 chip under a $16.5 billion deal that also covers the next-generation AI6, with TSMC covering additional capacity.

Terafab is one of a string of megaprojects betting that AI-driven demand for compute keeps growing for years, alongside efforts like Valar Atomics’s push to build nuclear reactors for AI data centers. Whether Grimes County ends up running chip lines or stays a framework on paper depends on financing and construction milestones that remain, by the companies’ own account, unresolved.

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