Terafab: Inside the $16.8 Billion Chip Megafactory Tesla, SpaceX, and Intel Are Building in Texas

Size, cost, and employment

At over 100 million square feet, the planned facility would be more than five times the size of the world's current largest building . The first-phase investment of $16.8 billion comes from Tesla and SpaceX; the full build-out has been estimated at up to $119 billion across all phases, including a prototype fab in Austin . The first phase is set to begin construction in 2026 and will create at least 3,000 jobs . As part of a tax abatement agreement, SpaceX separately committed to 1,800 jobs by 2035 and $5 billion invested . The State of Texas extended a $30 million Texas Enterprise Fund grant to SpaceX as a "deal-closing" incentive .

Intel's role

Intel is a strategic partner in the joint venture, though its specific financial contribution has not been disclosed . Reports indicate Intel is providing expertise ranging from design to manufacturing, but the company has been "cagey" about its exact commitments .

Site and water use

The facility will be built at the site of the former Gibbons Creek coal-fired power plant. SpaceX has committed to drawing process water from Gibbons Creek Reservoir instead of local groundwater, a move aimed at reducing conflict with local agriculture .

Local community concerns

The August 5, 2026, Grimes County meeting drew hundreds of residents objecting to the scale of tax breaks and what they described as a lack of transparency in the negotiation process . A JETI tax abatement agreement was signed alongside a $10 million non-refundable payment, but local critics argued the public had insufficient time or detail to evaluate the deal . The Anderson-Shiro Consolidated ISD superintendent publicly supported the project, saying it would strengthen the district and expand opportunities for students .

Why build a dedicated chip factory?

The rationale behind Terafab is rooted in compute demand. According to SpaceX and Tesla, their combined needs for robots, autonomous vehicles, and AI infrastructure will soon exceed what the global semiconductor supply chain can deliver. By owning the full production chain under one roof, the companies aim to secure a dedicated supply of advanced chips without relying on external foundries .