Elon Musk wants to build the world's largest chip factory in rural Texas, and he wants Starlink, Tesla, and xAI all pulling their silicon from the same building. Governor Greg Abbott announced this week that SpaceX, Tesla, and xAI will jointly develop Terafab, a 100-million-square-foot semiconductor fabrication campus on more than 6,000 acres in Grimes County, roughly midway between Houston and College Station.
Musk has described 100 million square feet as the "right order of magnitude" for a facility meant to consolidate logic chips, memory, and advanced packaging under a single roof, more than twice the footprint of Tesla's existing Giga Texas campus outside Austin. Land assembly began quietly in late May, when Wit Tech LLC, an entity tied to xAI, started acquiring parcels near the Gibbons Creek Reservoir; additional purchases followed through the summer.
The first phase alone carries a $16.8 billion price tag and is expected to create 3,000 jobs, with Texas extending a $30 million Texas Enterprise Fund grant and the project qualifying under the state's Jobs, Energy, Technology, and Innovation program. State incentive filings describe a far larger horizon: four total phases and a combined investment of $119 billion, a figure that would make Terafab one of the largest single industrial commitments in Texas history if it's ever fully realized.
The chips at the center of it all are meant to feed three different businesses at once. SpaceX needs them for Starlink satellites and the space-based data centers Musk has talked about building in orbit. Tesla needs them for Optimus robots and self-driving Cybercabs. Musk's SpaceX statement leaned into the pattern already set by the company's existing Texas footprint: Starbase, where Starship is developed and launched, and the Bastrop factory that manufactures Starlink kits for customers worldwide. Terafab, in that framing, is simply the next facility in a line SpaceX has been building toward for years.
The site's environmental commitments are notably specific for a project this size. Rather than draw on local groundwater or the Navasota River, Terafab will pull industrial water from the Gibbons Creek Reservoir, backed by a closed-loop recycling system and on-site wastewater treatment. SpaceX has also said it plans an on-site natural gas plant to power the facility independently. A precursor research fab already broke ground in April on the north campus of Giga Texas.