SpaceX and Tesla File for $119B TERAFAB Facility in Texas

Silicon Supply Chain

Elon Musk's companies plan to invest heavily to produce their own advanced chips as artificial general intelligence efforts intensify and compute shortages intensify. A public filing in Grimes County outlines TERAFAB, a joint project between SpaceX and Tesla that calls for an initial outlay of $55 billion before reaching a total commitment of $119 billion.

The effort reportedly aims to end reliance on outside semiconductor suppliers. Surging needs stem from Tesla's work on unsupervised full self-driving technology, ongoing development of the Optimus robot, and SpaceX's plans for data centers in orbit.

County records portray the complex as a multiphase, vertically integrated site for semiconductor production and high-performance computing. The companies have teamed with Intel to adopt its forthcoming 14A process, a move that would let them oversee their full hardware requirements.

Location

Planners have singled out the Gibbons Creek Reservoir area for the project. Chip plants and large-scale computing installations consume enormous amounts of electricity and water. Placement next to a major reservoir would give the "SpaceX Reinvestment Zone No. 1" ready access to those essentials and could one day sustain a terawatt of processing capacity.

Leveraging Municipalities

Grimes County has set a June 3 public hearing on a possible property tax abatement, yet no agreement has been reached. Musk told followers on X that the reservoir site represents only one option among several being weighed. "This is one of several locations under consideration for what will be the largest and most advanced chip fabrication facility in the world" — Elon Musk (@elonmusk), May 6, 2026.

By keeping the $119 billion commitment flexible, the executive appears to be encouraging competing regions to offer better incentives, forcing local officials to weigh generous tax relief and zoning changes against the possibility that another jurisdiction could win the project.