Tesla and SpaceX want their own chip factory with 3,000 workers
SpaceX and Tesla have revealed more details in their plan to invest $16.8 billion in a massive semiconductor factory planned for Grimes County, Texas.
The facility, known as TeraFab, is expected to manufacture chips for several computing-intensive applications associated with both companies.
At full construction, SpaceX says the factory could exceed 100 million square feet, or approximately 9.3 million square metres.
SpaceX CEO Elon Musk described the planned facility as potentially the largest and most valuable building on Earth after completion.
“TeraFab will be 50 times the size of the Pentagon when complete,” Musk said on X.
Since the Pentagon is 6.6 million square feet and SpaceX has only confirmed TeraFab will exceed 100 million square feet, Musk's "50 times" figure would require a final size closer to 330 million square feet — a number the company has not disclosed or confirmed.
Even so, the scale remains extraordinary: the Pentagon, Apple Park, Mall of America, and Giga Texas together total 25.04 million square feet, meaning TeraFab's confirmed 100 million square feet alone would already be roughly four times larger than all four combined.
The project originally emerged from Musk’s concern that existing semiconductor suppliers could not satisfy Tesla’s future computing requirements.
Tesla first discussed the concept publicly in November 2025, describing it as a much larger version of its Gigafactory model.
Plans announced in March 2026 called for the semiconductor plant to operate beside Tesla’s Austin headquarters.
SpaceX and Tesla subsequently established the project as a joint venture, with Intel later joining the development effort.
Musk has said the facility would use Intel’s 14A manufacturing process, although production plans may evolve during development.
The companies have linked the factory to chips required for space-based computing, advanced vehicles, and humanoid robotic systems.
The initial project estimate was $20 billion, but later filings indicated substantially larger potential spending during subsequent development phases.
A May property tax abatement application revealed that an initial phase could cost $55 billion, with eventual spending potentially reaching $119 billion.
The latest $16.8 billion commitment, therefore, does not represent the maximum investment that may eventually be required.
SpaceX expects the facility to employ at least 3,000 workers, including people from Grimes County and neighboring Brazos County.
Local authorities approved a 100% property tax abatement in June 2026 after county commissioners voted 4-1 on three related proposals.
The companies also say industrial operations will use water from Gibbons Creek Reservoir instead of relying on nearby groundwater supplies.
SpaceX and Tesla have also committed to wastewater treatment, water reuse, conservation measures, and compliance with environmental regulations.
Their plans include regulated handling of hazardous materials, chemicals, and industrial byproducts generated during semiconductor manufacturing.
“The combined SpaceX and Tesla demand for chips is expected to be in excess of 1 terawatt (TW) of compute,” said SpaceX in its website post.
The proposed scale makes TeraFab an unusually large industrial project, while its final cost and construction scope remain subject to future expansion.
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Efosa has been writing about technology for over 7 years, initially driven by curiosity but now fueled by a strong passion for the field. He holds both a Master's and a PhD in sciences, which provided him with a solid foundation in analytical thinking.
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