Tesla and SpaceX officially confirmed on August 6, 2026, the location and initial investment for Terafab, a vertically integrated semiconductor megafactory in Grimes County, Texas, with a Phase 1 capital commitment of $16.8 billion1,2.
The facility is projected to exceed 100 million square feet upon completion — roughly 3.6 square miles, an area equal to 10% of all the land in the city of Miami, according to Sawyer Merritt, who posted the figures on August 7, 2026. Elon Musk has described the scale as "the right order of magnitude" and called it "the largest and most valuable building on Earth by far" once complete.
Terafab is designed to combine logic chip fabrication, memory production, advanced packaging, and testing under a single roof. The stated output goal is over 1 terawatt of compute per year, with AI chips intended to feed Tesla's Optimus robots and Cybercab vehicles, as well as SpaceX's space-based data center infrastructure.
Intel has been named as a partner in the project, committing its advanced 14A process node to the facility. A precursor research fab at Giga Texas had already broken ground in April.
On the financial side, Phase 1 carries the $16.8 billion capital investment. Grimes County approved tax abatements for the project, and the facility received JETI program qualification. The Texas Enterprise Fund grant for the project is $30 million. Phase 1 is expected to create at least 3,000 jobs. SpaceX has stated it will draw water for the facility from the Gibbons Creek Reservoir rather than local groundwater.
The announcement lands amid a period of aggressive capital deployment across Elon Musk's companies. SpaceX is reportedly close to completing a $60 billion all-stock acquisition of Cursor, the AI coding startup ctx.
ANALYSIS The Terafab project represents a move toward vertical integration of AI chip supply for Tesla and SpaceX, consolidating fabrication, packaging, and testing in a single facility rather than relying on external foundries. The partnership with Intel and its 14A process node commitment suggest the project is drawing on established semiconductor manufacturing expertise rather than building process technology from scratch.