Tesla and SpaceX formally confirmed Terafab on August 6, putting a name and a scale on Elon Musk’s long-rumored chip push in Grimes County, Texas. The project is planned as a 100-million-square-foot semiconductor megafactory just north of Houston, with early production targeted for 2027 and mass production for 2028.
That confirmation is what has people searching now. Musk called Terafab “the largest and most valuable building on Earth by far” on X, and the companies said the site is meant to combine manufacturing, packaging and testing of advanced logic and memory chips in one facility. SpaceX also said the plant is designed to “bridge the divide between current global chip supply and the compute demand of the future,” with output aimed at more than 1 terawatt of compute a year optimized for edge inference.
The scale is staggering on paper, but the money already locked in is much smaller than the ceiling figure. Tesla and SpaceX say they have committed $16.8 billion for phase one, while SpaceX disclosed a $119 billion ceiling in May 2026 filings. Inside that broader plan, SpaceX CFO Bret Johnsen signed agreements committing at least $5 billion in Grimes County by 2030 and at least 1,800 full-time jobs by 2035, with the partners promising at least 3,000 jobs across Grimes County and neighboring Brazos County.
That gap between the headline number and the binding commitment is why the project drew such a sharp local response. On August 5, hundreds of residents turned out at a Grimes County meeting to object to the size of the tax breaks and what they described as a lack of transparency. Sarah Borowicz was among the people living that reaction, part of a community trying to understand how a project pitched as a generational industrial buildout translates into actual obligations for the county.
Water is another pressure point. The site sits on Gibbons Creek Reservoir, which once cooled a coal-fired power plant that closed in 2018, and SpaceX says it will draw process water from the reservoir rather than local groundwater. Intel has agreed to contribute to Terafab, but it has not disclosed how much, leaving one of the project’s major funding questions still open even as Tesla and SpaceX push ahead with Texas Jobs incentives, the Texas Enterprise Fund grant and a schedule that points to production before the end of the decade.
For now, Terafab looks less like a finished deal than a locked-in direction: a giant factory, a smaller confirmed commitment than the ceiling suggests, and a community that will spend the next year watching whether the promises on jobs, water and timing hold up once construction deepens.
