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Close TechCrunch Desktop Logo TechCrunch Mobile Logo LatestStartupsVentureAppleSecurityAIAppsDisrupt 2026 EventsPodcastsNewsletters SearchSubmit Site Search Toggle Mega Menu Toggle Topics Latest AI Amazon Apps Biotech & Health Climate Cloud Computing Commerce Crypto Enterprise EVs Fintech Fundraising Gadgets Gaming Google Government & Policy Hardware Instagram Layoffs Media & Entertainment Meta Microsoft Privacy Robotics Security Social Space Startups TikTok Transportation Venture More from TechCrunch Staff Events Startup Battlefield StrictlyVC Newsletters Podcasts Videos Partner Content TechCrunch Brand Studio Crunchboard Contact Us Image Credits:SpaceX Transportation Tesla and SpaceX will invest $16.8B to start building ‘Terafab’ chip factory in Texas Sean O'Kane 8:21 AM PDT · August 6, 2026 Tesla and SpaceX said Thursday that “Terafab,” the advanced chip factory they are jointly developing, will be built in Grimes County, Texas, outside Houston, and that they will make an initial investment of $16.8 billion in the project. The factory will be “the largest and most valuable building on Earth by far,” Elon Musk, CEO of both companies, wrote in a post on Thursday. More than 100 million square feet of manufacturing space is planned for the facility, according to SpaceX. The companies say the facility will employ at least 3,000 people from Grimes and nearby Brazos County. “The facility will be an advanced semiconductor fab that will bridge the divide between current global chip supply and the compute demand of the future,” a post on SpaceX’s website reads. The animus behind Terafab is that Musk’s vision of the future — one where millions of robots take over human jobs, robotaxis do all the driving, and satellites become data centers for AI training and inference — requires a phenomenal amount of computing power, far more than what current production rates support. SpaceX alone has suggested in filings that it may spend as much as $119 billion on the project across a “multi-phase” construction plan — although the company didn’t talk about Terafab at all on its first earnings call earlier this week. Intel has said it will contribute to the Terafab project, although it’s been cagey about its exact contributions. var playerInstance_jwplayer_6a7530635f572 = jwplayer( "jwplayer_6a7530635f572" ); playerInstance_jwplayer_6a7530635f572.setup(); “Terafab will be epic in both its mission and in its sheer size, designed to build new compute at an unprecedented scale and speed. A vertically integrated factory with more than 100 million square feet of manufacturing space is planned. This facility will house the manufacturing, packaging, and testing of advanced logic and memory devices,” SpaceX writes on its website. “Bringing these aspects together in one location will enable fast, recursive improvements and accelerate new compute deployed. Terafab will produce chips optimized for edge computing and inference for use in hardware like Tesla’s Optimus robots and self-driving Cybercabs, along with high-power chips designed for operating SpaceX’s space-based data centers,” the company wrote. SpaceX said in its post that it is “committing to the use of” water from the local Gibbons Creek Reservoir instead of local groundwater. The announcement followed a heavily attended county meeting on Wednesday where hundreds of residents attended and raised concerns about millions of dollars in tax breaks awarded to the project, as well as a lack of transparency. “We believe this agreement will strengthen our district, expand opportunities, and better prepare our students for their future,” Anderson-Shiro Consolidated Independent School District Superintendent Dr. Sarah Borowicz said in a statement released by the Texas Governor’s office. “There are defining moments in the life of a school district, and this is one of those moments. Our commitment now is to ensure that every opportunity created through this agreement is managed wisely, transparently, and always with students at the center of every decision.” Topics chips, Elon Musk, Space, SpaceX, Tesla, Texas, Transportation When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence. Sean O'Kane Sr. Reporter, Transportation Sean O’Kane is a reporter who has spent a decade covering the rapidly-evolving business and technology of the transportation industry, including Tesla and the many startups chasing Elon Musk. Most recently, he was a reporter at Bloomberg News where he helped break stories about some of the most notorious EV SPAC flops. He previously worked at The Verge, where he also covered consumer technology, hosted many short- and long-form videos, performed product and editorial photography, and once nearly passed out in a Red Bull Air Race plane. You can contact or verify outreach from Sean by emailing [email protected] or via encrypted message at okane.01 on Signal. View Bio October 13 – 15 San Francisco Scale faster. Grow your portfolio. Gain practical expertise. No matter your goal, Disrupt can empower you.Save up to $330 today! 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