SpaceX and Tesla will make an initial investment of $16.8 billion to build Terafab, an advanced artificial intelligence semiconductor complex in Grimes County, Texas, to secure chip capacity that Musk says is critical to his companies' future.
This facility aims to bridge the gap between global chip supply and the over 1 terawatt of computing power SpaceX and Tesla are expected to need in the coming years.
SpaceX stated in a Thursday announcement on its website that future expansion phases could significantly increase the total investment, adding that the plant will create at least 3,000 jobs. Musk commented: "Terafab is bringing cutting-edge manufacturing to America, creating thousands of high-paying jobs in Texas, and enabling us to mass-produce AI chips for use both on Earth and in space."
Texas Governor Greg Abbott remarked: "Texas is where great ideas grow and thrive."
The SpaceX stock price remained stable after the lock-up period expired on Thursday, trading up 1.4% intraday as of press time.
Total investment exceeding $100 billion, partnering with Intel to build an AI chip megafactory
Earlier this year, SpaceX acquired Musk's startup xAI in a deal focused on building space data centers, completing the largest IPO in history in June. Since then, Musk has further strengthened AI integration across his companies.
This vertically integrated, 100-million-square-foot Terafab facility will handle the manufacturing, packaging, and testing of advanced logic and memory chips under one roof. These chips will power Tesla's Optimus robots and Cybercab, as well as produce high-power chips for SpaceX's space data centers.
A May document showed that SpaceX initially proposed investing $55 billion in Terafab, with total investment potentially rising to $119 billion if subsequent expansion phases are completed.
To advance the project, SpaceX partnered with Intel earlier this year, as the chipmaker seeks to transform itself by expanding its foundry business.
Tesla already began construction of its Giga Texas factory's north campus research facility in April, which is seen as a precursor project to Terafab.
The Grimes County site is located near Gibbons Creek Reservoir, and the two companies plan to use water from the reservoir for industrial production rather than tapping local groundwater.
This project further expands the presence of SpaceX and Tesla in Texas, where they already have bases in Starbase, Bastrop, and McGregor.
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