SpaceX (NASDAQ:SPCX) and Tesla Inc. (NASDAQ:TSLA) on Thursday confirmed Grimes County, Texas as the permanent home for Terafab, the companies’ giant semiconductor manufacturing venture.
- SPCX stock is up Thursday. See the chart and price action here.
Foundation prep starts almost immediately. Renderings are expected within days, and construction should follow within months, Teslarati reported.
The confirmation followed a $10 million payment SpaceX sent to Grimes County earlier this week, satisfying a deadline built into the tax abatement agreement both sides signed in June.
The foundations for an exciting future are being built in Texas. Next up: Terafab → https://t.co/jGg52Zhn5I pic.twitter.com/SNfSXNr2tb
— SpaceX (@SpaceX) August 6, 2026
Site Selection Came Down to Water and Workers
SpaceX chose the Gibbons Creek Reservoir, former home of the Gibbons Creek Steam Electric Station, for its rainwater storage capacity and its proximity to Houston’s deep labor pool, with more than 15.9 million people living within three hours of the site.
Read Also: SpaceX Latest Pentagon Deal Is Bigger Than Half a Year of Rocket Revenue
The company plans to power the facility with its own natural gas plants rather than draw from the ERCOT grid, and it now owns the Navasota River pumping station it will use to divert stormwater into the reservoir.
Terafab Texas will be the largest and most valuable building on Earth by far.
— Elon Musk (@elonmusk) August 6, 2026
And it will be stunningly beautiful. pic.twitter.com/4NweOqTL7y
Terafab brings together three of Elon Musk‘s companies — SpaceX, Tesla and xAI — as well as Intel Corp. (NASDAQ:INTC). Musk first unveiled the venture in March.
An initial prototype fab is already underway at Tesla’s Giga Texas campus in Austin, feeding into the full-scale Grimes County complex, which SpaceX estimates could cost $55 billion in its first phase and up to $119 billion across all phases.
Behind the price tag sits a supply problem SpaceX spelled out plainly in its IPO paperwork. Its Form S-1 warns that orbital AI ambitions depend on chip access “significantly more than are currently available,” pointing to capacity constraints at foundries including TSMC and Samsung Foundry.
Musk has long argued that existing global fab output covers only a sliver of what Tesla and SpaceX will eventually need to power vehicles, Optimus robots and space-based data centers.
Terafab will be built in Grimes County, Texas
— Tesla (@Tesla) August 6, 2026
In April, we broke ground on our research fab on the North Campus of Giga Texas – the precursor to Terafab.
Both Tesla & SpaceX will need far more chips than current & future global production can supply.
This is why we're building… pic.twitter.com/je4jKXuQrY
At full scale, Terafab targets 1 terawatt of annual AI compute capacity, roughly double current U.S. semiconductor output, with a goal of 1 million wafer starts per month using Intel’s 14A process.
Wednesday’s confirmation pushes the project from paperwork toward ground-breaking. Even so, SpaceX’s own S-1 cautions that Terafab “may not be successful” in closing the chip gap it was built to solve.
Read Also: NuScale Stock Decays After Q2 Revenues Miss Estimates
Photo: Shutterstock
