SpaceX JV Eyes New Texas Site for $55B Manufacturing Project

The joint venture of SpaceX, Tesla and xAI has proposed a location for its massive, $55 billion chip manufacturing campus dubbed Terafab. Total costs may amount to $119 billion if the facility is expanded. Production is expected to begin in 2027.

The project could take shape near College Station, Texas, with officials set to hold a meeting in June to consider a tax abatement, as reported by the Houston Chronicle. The site is in Grimes County’s Gibbons Creek Reservoir, about 84 miles northwest of downtown Houston and 125 miles east of downtown Austin, Texas.

Elon Musk announced plans for Terafab in March. The need for this project rose as Musk estimated the chip demand for his companies may not be met by existing suppliers, although reshoring manufacturing also played a role. Terafab could produce enough chips for 1 terawatt of computing power each year. By comparison, the U.S. annual consumption is half that.

To aid this endeavor, Tesla filed plans for a 2 million-square-foot R&D facility next to its existing Gigafactory in Austin. This property may support research for Terafab, while the manufacturing itself would take place elsewhere on account of land constraints.

That’s where the large site in Grimes County comes into play, as it may include two separate plants, each creating chips with different use-case scenarios, including space-based data centers. Intel will also be part of the fabrication process.

The need for chips and Tesla’s other deals

Tesla also has ongoing deals with Samsung. Last year, the duo inked a $16.5 billion deal to produce AI5 and AI6 chips, bumping Samsung’s project in Taylor, Texas. This agreement expedited Samsung’s development process, as it had faced several delays up to that point due to difficulties attracting clients.

In fact, the plant is set to begin operations in 2026, after approximately two years of delays. Samsung first chose the Taylor site in 2021, then broke ground one year later. Notably, this marked the largest economic development in Texas at the time.