Texas officials and SpaceX have formally announced that Terafab, a semiconductor superfactory led by Elon Musk, will be built in Grimes County, Texas. The first phase carries capital spending of $16.8 billion and is meant to establish a highly integrated chip manufacturing base.
According to the announcement, the facility is expected to create 3,000 local jobs once it is fully completed and could help drive development of a surrounding industrial cluster. The project is also aimed at bringing production stages under centralized management to reduce supply chain risk and preserve independence in core technologies.
Power plant and battery storage planned on site
Riley Trettel, who is responsible for energy and data center development at SpaceX, said the site will build its own natural gas power plant and a large battery storage array, including Megapack systems, to meet heavy electricity demand. The project team said artificial intelligence workloads and advanced manufacturing are pushing power needs higher, putting pressure on regional grid capacity.
Terafab is taking a vertical integration approach and plans to use Tesla energy storage technology to secure independent power supply. Groundwork for the site has already started, and the project has moved from payment activity into physical construction.
$16.8 billion first phase with Texas state support
Official disclosures show Terafab's first-phase capital expenditure totals $16.8 billion. The project has also received a $30 million grant from the Texas government.
The facility is planned at 100 million square feet and will be built in stages across roughly 3,000 acres. SpaceX currently controls more than 13,000 acres of land. The project is expected to create 3,000 jobs and is intended to help fill existing supply gaps while targeting annual artificial intelligence compute output of 1 terawatt.
A filing submitted in May said Terafab's initial investment could reach as much as $55 billion. For comparison, Taiwan Semiconductor Manufacturing Co. is expected to spend $60 billion to $64 billion in capital expenditure this year.
Manufacturing, packaging and testing under one roof
The vertically integrated factory will combine the manufacturing, packaging and testing of advanced logic and memory devices in one system. The project description says that setup is intended to support rapid, recursive improvement and speed up deployment of new computing capacity.
Terafab will produce chips optimized for edge computing and inference. Those chips are meant for hardware such as Tesla Optimus robots and self-driving vehicles, along with high-performance chips designed for SpaceX space data centers.
Intel has confirmed it is part of the project and will provide wafer manufacturing and advanced packaging support. The project says this centralized production model is meant to reduce the effect of geopolitical disruptions on the supply chain and strengthen hardware resource independence across the group.