SpaceX Files for TERAFAB Construction Site in Texas

The race to reach artificial general intelligence (AGI) is accelerating, and compute power remains the primary constraint for competitors.

A public notice filed in Grimes County, Texas outlines the scale of Elon Musk’s plan to ease that bottleneck. TERAFAB, a joint venture between SpaceX and Tesla, calls for a major capital outlay, with initial phases requiring $55 billion up front and a total projected investment of $119 billion.

Silicon Supply Chain

TERAFAB is intended to reduce Tesla and SpaceX’s reliance on external semiconductor foundries. With Tesla's pursuit of unsupervised FSD, the rapid iteration of the Optimus humanoid robot, and SpaceX's ambitions to deploy orbital datacenters, demand for custom silicon is rising quickly.

According to Grimes County documentation, the proposed site would be a multiphase, vertically integrated semiconductor manufacturing and advanced computing fabrication facility. By partnering with Intel to utilize its upcoming 14A manufacturing process, Tesla and SpaceX are moving to control the entire hardware stack.

Location

The notice identifies the Gibbons Creek Reservoir as the targeted site. Semiconductor manufacturing and massive computing clusters require substantial power and water.

By choosing a site with direct access to a major reservoir, the proposed "SpaceX Reinvestment Zone No. 1" would secure the physical infrastructure needed to eventually support up to a terawatt of computing output.

Leveraging Municipalities

Grimes County has scheduled a public hearing for June 3 to consider a property tax abatement agreement, but the deal is not finalized. Musk recently confirmed on X that the Gibbons Creek location is one of several sites under consideration.

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 indicating that the $119 billion investment is flexible, Musk is encouraging competition among local jurisdictions, pressuring Grimes County commissioners to approve tax abatements and favorable zoning or risk being outbid by other locations.