Tesla and SpaceX confirm Terafab, a $16.8 billion chip plant in Grimes County, Texas

Tesla and SpaceX are building their own chip factory, and the first phase alone is $16.8 billion.

The confirmed numbers

Confirmed on August 6, 2026: the plant is called Terafab and it goes in Grimes County, Texas. The initial investment is $16.8 billion, with at least 3,000 jobs and a total footprint of more than 100 million square feet. Across all phases, the spend could reach as much as $119 billion.

Texas extended a $30 million Texas Enterprise Fund grant to SpaceX for the project, which qualifies under the state’s jobs and innovation program.

Why the scope is unusual

Terafab plans to put logic, memory, advanced packaging and testing all on one site, a combination almost nobody attempts under a single roof. Elon Musk described it as “the most epic chip-building effort” and, separately, as the largest and most valuable building on earth.

The customer list explains the ambition: it is internal. Tesla’s Optimus robots and Cybercabs, and SpaceX’s plans for data centers in orbit, are the intended consumers of the output. Rather than compete for capacity at existing foundries, the two companies are building the supply chain they expect to need. The bet is not entirely solitary, either. SpaceX also partnered with Intel earlier this year, so Terafab is not an all-or-nothing wager on going it alone.

The vertical integration question

Chipmaking is the industry where vertical integration has the harshest track record, which is exactly what makes this project worth watching. Combining four distinct manufacturing disciplines on one greenfield site, funded by two companies whose core businesses are cars and rockets, is either the smartest move of the decade or the most expensive way to learn why almost nobody does it. The first real signal will come when phase one opens and the $16.8 billion starts producing silicon rather than square footage.