Tesla and SpaceX Announce $16.8 billion Terafab Chip Plant in Texas
On 6 August 2026, Tesla and SpaceX launched Terafab, a joint AI chip plant in Grimes County, Texas, with an initial investment of $16.8 billion. The facility, spanning over 100 million square feet, will produce logic and memory chips for Tesla's Optimus robots and Cybercab, as well as high-power chips for SpaceX's space data centres. Total investment could reach $119 billion with later expansions. The project is expected to create 3,000 jobs, uses water from Gibbons Creek Reservoir, and includes Intel's participation.
On 6 August 2026, SpaceX and Tesla announced the official launch of Terafab, a jointly built advanced artificial intelligence chip factory located in Grimes County, Texas. The initial investment is $16.8 billion, with a planned manufacturing area exceeding 100 million square feet (approximately 9.3 million square metres). The facility will cover the entire process of manufacturing, packaging and testing of advanced logic and memory chips, and is designed to supply chips for the more than one terawatt (1,000 gigawatts) of computing power that SpaceX and Tesla will need in the coming years.
A May 2026 document shows that total investment would increase to $119 billion if subsequent expansion phases are completed. The factory site is near Gibbons Creek Reservoir, from which production water will be drawn rather than from local groundwater. SpaceX and Tesla already have bases in Texas at Starbase, Bastrop and McGregor, and this project further expands their presence there.
The Terafab plant will produce processors for Tesla's Optimus humanoid robots and Cybercab driverless taxis, as well as high-power chips for running SpaceX's space data centres. Tesla has already begun construction on its research facility at the north campus of Giga Texas, seen as a precursor to Terafab. In this project, SpaceX completed its acquisition of Musk's startup xAI earlier in 2026, and subsequently carried out a large-scale initial public offering. Intel has announced its participation in Terafab, but has not disclosed the specific amount or scope of its investment. Tesla's website shows that the company is recruiting memory process integration engineers, whose responsibilities include driving end-to-end process integration for DRAM memory cell structures.
In a statement issued by the office of the Texas Governor, the superintendent of the Anderson-Shiro Consolidated Independent School District said that they believe the cooperation agreement will strengthen the local school district and expand development opportunities, and pledged that related decisions will be managed with prudence and transparency.
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