The U.S. semiconductor industry is in the middle of a major buildout as companies race to secure domestic chip supply for artificial intelligence, vehicles and advanced computing. In Texas, Elon Musk’s business empire has now put forward one of the biggest proposals yet: a semiconductor manufacturing campus called Terafab in Grimes County, northwest of Houston. SpaceX and Tesla say the project is designed to support their future chip needs at a scale that far exceeds what they can currently buy from outside suppliers.
SpaceX and Tesla formally advanced a project on an extraordinary scale
SpaceX and Tesla formally unveiled the initial phase of Terafab on August 7, according to reporting by Tom’s Hardware that cited company materials, with the first stage expected to require $16.8 billion in investment and the full campus planned to exceed 100 million square feet of manufacturing space. That size is what has driven comparisons to major U.S. landmarks, because 100 million square feet is far larger than the Pentagon, Apple Park and the Mall of America combined, based on the commonly cited sizes of those buildings. Reuters had previously reported on March 22 that Musk described Terafab as an advanced AI chip complex in the Austin area and said the facility would effectively be two fabs focused on one chip design each.
Reuters also reported in May that SpaceX had proposed an initial investment of $55 billion for the broader Terafab concept in Texas through a public filing. Tom’s Hardware reported that the campus now taking shape is planned for Grimes County and would be built on land owned by SpaceX, indicating the proposal has moved beyond an abstract concept into a site-specific development plan. The companies have said little publicly about a final construction schedule, and Reuters reported in March that Musk did not provide a timeline for the new project.
The local footprint is now more clearly tied to the Gibbons Creek Reservoir area in Grimes County. County-level documents summarized by the Gibbons Creek Conservation and Redevelopment District say Grimes County approved an incentives package on June 3, 2026, for the proposed SpaceX-Terafab project, including commitments that the county says include a stated $5 billion investment and 1,800 full-time equivalent jobs. KBTX separately reported that SpaceX officially signed its tax abatement agreement with Grimes County in late June, making the company legally committed under that agreement to invest at least $5 billion by 2030 and create at least 1,800 full-time jobs by 2035.
At the same time, the public record still leaves gaps. Tom’s Hardware reported that company materials for the broader campus say Terafab is expected to employ at least 3,000 people and that between 60% and 80% of workers would come from Grimes County and nearby Brazos County. But local summaries of the tax deal note that the agreement does not clearly require SpaceX to publicly report how many jobs are filled by county residents, how many positions are transferred from affiliates, or what wage levels will be attached to all roles. The company also has not released a full public breakdown of construction phases, building uses or a complete hiring timeline for nearby communities.
The stated reason for Terafab is chip supply. Reuters reported in March that Musk said, “We either build the Terafab or we don’t have the chips,” arguing that existing global production would meet only a small fraction of his companies’ future needs. In the same report, Reuters said Musk described a goal of eventually producing one terawatt of computing capacity per year, with one chip aimed at Tesla vehicles and Optimus robots and another intended for SpaceX space-based data centers.
Tom’s Hardware, citing SpaceX and Tesla materials, reported that the companies expect their combined semiconductor demand to exceed one terawatt of compute annually and want Terafab to function as a vertically integrated campus handling logic, memory, packaging and testing in one place. That approach differs from the usual semiconductor model, where those steps are often split across multiple facilities and suppliers. For Texas residents, what is confirmed today is that Grimes County has become the focal point for a potentially historic industrial project, while the exact pace of construction, final employment mix and broader regional effects remain dependent on later filings, permits and company disclosures.