SpaceX and Tesla have announced plans to build a $16.8 billion AI chip manufacturing complex in Grimes County, Texas, according to a statement from the aerospace company. The facility, called Terafab, will produce advanced chips for both companies, addressing their projected need for over 1 terawatt of computing power. This exceeds current global chip production capacity by a significant margin. Elon Musk has described Terafab as a fully integrated operation that will handle every stage of chip design and manufacturing. The project marks a major shift in Texas' role as a hub for high-tech manufacturing.
The investment comes as both companies face increasing demands for computing power. SpaceX's Starship program and Tesla's autonomous vehicle development require massive data processing capabilities. The new facility will be located in Grimes County, a rural area that has seen a surge in tech-related investments in recent years. Local officials have welcomed the project, citing potential job creation and economic growth. The site was chosen in part due to its proximity to existing infrastructure and available land.
Tesla has already taken steps toward this initiative, breaking ground in April on a research fabrication facility at its Giga Texas plant. That facility is described as a precursor to Terafab, with the goal of developing the technologies needed for large-scale chip production. SpaceX officials said the Texas plant will allow the company to reduce its reliance on overseas suppliers and accelerate innovation in AI and space exploration.
The project is expected to take several years to complete, with construction likely to begin in late 2026. Officials estimate the facility could employ thousands of workers once operational. While the focus is on Texas, the announcement has drawn attention from Brevard County, home to NASA's Kennedy Space Center. Some local businesses have expressed interest in potential partnerships, though no formal agreements have been made. The investment underscores the growing importance of chip manufacturing in the global tech race.