New Semiconductor Facility Planned in Texas
SpaceX and Tesla are set to construct a massive semiconductor facility known as TerraFab in Grimes County, Texas. This ambitious project promises to be much larger than any existing building, including the record-holder, the New Century Global Center in Chengdu, China, which spans about 18.9 million square feet. In contrast, TerraFab will cover an astonishing 100 million square feet, more than five times larger.
Elon Musk has described this facility as potentially the largest and most valuable building on the planet, stating on X that “TerraFab Texas will be the largest and most valuable building ever on Earth. And it will be stunningly beautiful.” The initial investment is estimated at over $16.8 billion, and the project is expected to generate 3,000 new jobs, according to Texas Governor Greg Abbott.
The facility aims to serve as a vertically integrated chip manufacturing plant, combining logic, memory, and advanced packaging all under one roof. Both companies intend to utilize the production capabilities, with plans to produce more than 1 terawatt of computing power annually.
In Musk’s words, this initiative marks “our most ambitious chip-building effort yet.” He emphasized its significance in meeting the increasing demand for chips as humanity extends its reach into space. “TerraFab is bringing cutting-edge manufacturing to the United States, creating thousands of good-paying jobs, and enabling us to produce AI chips at scale for use on Earth and in space,” he commented.
TerraFab’s website outlines Musk’s comprehensive vision for AI infrastructure, which includes plans for up to 1 million Tesla Optimus robots and 10 million tons of mass to be launched into orbit each year. The facility is also expected to support over 1 terawatt of solar power. In comparison to Tesla’s Gigafactory Texas, which spans nearly 10 million square feet, the TerraFab is designed for “terawatt-scale” production.
The company has submitted eight applications for tax incentives to local school districts, requesting a 10-year property tax freeze at about 48% of assessed value. It is also looking for state support to cover tax differences through the Texas Jobs, Energy, Technology, and Innovation Program, also referred to as JETI.
An official filing noted that this tax break is essential due to cost disparities between Texas and other states. The filing warns that without this assistance, the project’s internal rate of return would fall below acceptable levels, making it less competitive with jurisdictions like Arizona.
Additionally, Texas has allocated a $30 million grant to SpaceX through the Texas Enterprise Fund. SpaceX, headquartered in Texas, operates the Starbase launch facility and manufacturing site there. Governor Abbott called TerraFab a “first of its kind” facility that will expedite chip production and create numerous jobs, asserting, “Texas is a place where big ideas grow even bigger.”
