SpaceX, Tesla to Develop 100 MSF Texas Manufacturing Facility
First phase investment will reach $16.8 billion.
Following proposals advanced earlier this year, SpaceX and Tesla have chosen the Grimes County, Texas, site for their Terafab project. The development will feature more than 100 million square feet of semiconductor manufacturing space. Investment may reach up to $119 billion across four phases, with $16.8 billion earmarked for the first stage.
The project has already achieved several milestones. In June, the Grimes County city council approved a tax abatement framework consisting of a 10-year PILOT program for an annual figure of $20 million starting in 2027. In exchange, SpaceX must invest a minimum of $5 billion by 2030 and create at least 1,800 jobs by 2035.
In July, the tax structure expanded further as the Anderson-Shiro Consolidated Independent School District and Iola Independent School District advanced separate JETI acts for Terafab. These tax breaks clock in at nearly $1.7 billion, Houston Chronicle reported. And this month, the Office of the Texas Governor awarded $30 million in a TEF grant.
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The property will feature a vertically integrated system including manufacturing, packaging and testing of chips to be used across Tesla’s Optimus robots and self-driving Cybercabs, as well as SpaceX’s space-based data centers.
Combined chip demand for SpaceX and Tesla may surpass the 1-terawatt threshold, substantially outpacing the current available semiconductor stock. This lopsided supply and demand dynamic served as the core Terafab development driver.
The site is approximately 125 miles east of downtown Austin, Texas and 84 miles northwest of Houston’s city center.
Reshoring semiconductor manufacturing
The project advances U.S. domestic manufacturing capacity and tightens semiconductor production chains. Samsung’s $17 billion Taylor, Texas, development is another example, with the company looking to combine manufacturing and packaging. Work is well underway, with construction of one plant completed.
TSMC mirrors this manufacturing reshoring trend, as the company announced a new $100 billion investment in its Peoria, Ariz., campus, bringing the total to $265 billion. Also in Peoria, Amkor is developing a $7 billion testing and packaging facility to complement TSMC’s fabs, enhancing supply chains.
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