Credit: SpaceX
SpaceX and Tesla confirmed on Thursday that Terafab, their joint semiconductor plant, will rise in Grimes County, an hour outside Houston. The two companies will put in $16.8bn to start. Future phases could push the total far higher. A May filing floated as much as $119bn.
The plant is meant to be vast. In its announcement, SpaceX described more than 100 million square feet of floor space, roughly the size of a small town. It will make, package, and test advanced logic and memory chips in one place. Musk calls it “the most epic chip-building effort” in the world.
Why build a fab at all
The reason is demand that no one else can meet. SpaceX and Tesla expect to need more than 1 terawatt of computing power in the coming years. That is far beyond what the world’s chipmakers can supply today. Rather than wait in line, Musk wants to make the chips himself.
The output has two homes. Musk says about a quarter will go to Tesla’s Optimus robots and Cybercabs. The other three quarters will power SpaceX’s space-based data centres, the orbital compute Musk has staked the company’s future on.
It is vertical integration taken to an extreme. Tesla broke ground on a research fab in April, the precursor to this plant, after months of speculation. SpaceX then bought Musk’s AI firm xAI and went public in the largest IPO ever. Terafab folds chipmaking into the same stack.
The catch
Building a leading-edge fab is one of the hardest things in industry. Terafab would take on Samsung, SK Hynix, Micron, and TSMC. Job ads suggest it is gunning for the memory market in particular. Intel has signed on to help, but has said little about what it will do.
The commitment is also softer than it sounds. SpaceX’s own IPO filing called Terafab a “general framework,” with both sides free to walk away. Investors are already nervous about runaway AI spending, having punished Google and Meta for it. Terafab is a first phase, not a finished factory.
Locally, not everyone is sold. Nearly 900 Grimes County residents signed a petition demanding more oversight of AI projects that take public money, citing water, power, and pollution. SpaceX has promised the county $20m a year, reservoir water instead of groundwater, and its own gas-fired power so it does not lean on a Texas grid the governor just froze to new data centres.
Musk’s own description is less an engineering spec than a manifesto. “Sci-fi city is what we’re aiming for,” he wrote. The gap between that line and a working fab is enormous, and Terafab has not yet made a single chip. But few companies have ever tried to own this much of the future at once.
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