Tesla & SpaceX Build World's Largest Chip Factory

SpaceX and Tesla are embarking on a monumental project to build a semiconductor factory named TeraFab in Grimes County, Texas. The initial investment confirmed for this facility is $16.8 billion, with potential total spending reaching up to $119 billion across its development phases.

When fully constructed, TeraFab is anticipated to cover over 100 million square feet, a scale described by Elon Musk as potentially fifty times the size of the Pentagon. This immense facility is intended to produce chips crucial for SpaceX and Tesla's operations, including space-based computing, advanced vehicles, and humanoid robotic systems.

The project's genesis stemmed from Tesla's concerns about the capacity of current semiconductor suppliers to meet future demands. Initially envisioned in November 2025 and later planned beside Tesla's Austin headquarters, the venture has evolved into a joint effort with Intel also joining the development.

Plans also detail significant employment opportunities, with TeraFab expected to provide at least 3,000 jobs for local residents. Environmental commitments include using water from Gibbons Creek Reservoir, implementing wastewater treatment, water reuse, and conservation measures, alongside regulated handling of hazardous materials.