Tesla and SpaceX to Start Building the $16.8 Billion Terafab Chip Plant in Texas

After months of rumors, Tesla and SpaceX have officially announced a joint venture: a semiconductor plant called Terafab, to be built in Grimes County, Texas, north of Houston. The initial investment will come to $16.8 billion.

Elon Musk, who heads both companies, called the future facility “the largest and most expensive building on Earth — by a wide margin.” According to SpaceX, the plant will occupy more than 100 million square feet of production space and provide jobs for at least 3,000 people from Grimes and Brazos counties.

Why the plant is needed

The logic of the project is simple: the vision of the future that Musk paints — millions of robots in place of people, robotaxis at the wheel, and satellites turned into data centers for training and running AI — demands colossal computing power, far exceeding today's production volumes. Terafab, as conceived, is meant to “bridge the gap between the current global supply of chips and the computing demand of the future.”

The plant is designed to be vertically integrated: under one roof it plans to house the manufacturing, packaging and testing of logic chips and memory modules. Such a combination, SpaceX claims, will allow technologies to be refined quickly and iteratively. The chips will come in two types: those optimized for edge computing and inference — for the Optimus robots and Cybercab robotaxis — and high-power ones, for SpaceX's orbital data centers.

The scale of the ambition is underscored by individual figures: in its own documents, SpaceX mentioned that the multiphase construction could cost up to $119 billion. That said, on its first investor earnings call this week, the company did not breathe a word about Terafab. Intel has also announced its involvement in the project, though it has been evasive about the size of its contribution.

Water, taxes and unhappy neighbors

SpaceX has promised to draw water from the local Gibbons Creek Reservoir rather than from underground sources. Even so, the announcement was preceded by a crowded county meeting on Wednesday, where hundreds of residents voiced concerns about the multimillion-dollar tax breaks granted to the project and the overall opacity of the deal.

The authorities, however, are upbeat. As Sara Borowitz, superintendent of the local school district, put it, the agreement “will strengthen the area, expand opportunities and better prepare students for the future,” adding that what matters now is managing those opportunities “wisely and transparently.”

Source: TechCrunch