A public notice on Grimes County's website says the Terafab project would build a next-generation, vertically integrated chip and advanced computing fabrication plant.
The initial investment would start construction in Texas, with total capital spending potentially reaching $119 billion if later phases are completed.
The proposal marks a major step in Elon Musk's plan to expand SpaceX into semiconductor manufacturing and advanced computing infrastructure.
Can SpaceX's Texas Terafab overcome the crippling worker shortage that has already stalled rival chipmakers?
Is SpaceX's $119 billion leap into chipmaking a strategic masterstroke or a massive gamble against established industry titans?
As a giant chip factory is planned for rural Texas, can the local environment and power grid survive its colossal thirst?
Terafab’s Dual-Track 2nm AI and Radiation-Hardened Chips Set to Revolutionize Earth and Space Computing
Overview
Elon Musk launched the Terafab project in March 2026 as a $20-25 billion joint venture between Tesla, SpaceX, and xAI, aiming to build the world's largest chip factory with 1 terawatt of AI processing power annually. Intel joined in April 2026, bringing advanced 14A and 18A manufacturing technologies and securing a major U.S. government investment. Terafab will produce two types of chips: AI5 and AI6 for Tesla's autonomous vehicles and robots, and radiation-hardened D3 chips for SpaceX's planned constellation of one million AI satellites. The project requires massive space and resources, raising local environmental concerns and prompting a public hearing in June 2026. This vertical integration seeks to accelerate AI innovation while strengthening U.S. semiconductor independence.