Elon Musk is making another move in the tech world. His two major companies, Tesla and SpaceX, have announced the construction of Terafab, the world's largest chip manufacturing plant , a colossal project to be built in Grimes County, Texas. The initial investment exceeds $16.800 billion (approximately €14.500 billion) and promises to be a game-changer in semiconductor production.
This is no exaggeration. The facility will occupy approximately 9,3 million square meters and will be designed to meet the growing demand for chips from both companies. According to the developers themselves, their combined processing needs will exceed one terawatt, a figure that current global supply cannot satisfy. Therefore, they have decided to take matters into their own hands and manufacture their own components.
A multi-million dollar investment with public support
Texas Governor Greg Abbott, a Republican, confirmed the project this Thursday. The first phase will receive a $30 million grant from the Texas Enterprise Fund , a state program that seeks to attract major industrial investments. This isn't the only support: SpaceX had already requested tax breaks from the county, and long-term plans include expansions that could raise the total investment to $119.000 billion if all planned phases are completed.
The choice of Texas is no coincidence. The state has become the epicenter of Musk's businesses. SpaceX already has its global headquarters there and operates the Starbase launch site, while Tesla has a gigafactory near Austin. With Terafab, the tycoon is reinforcing his commitment to the state and to technological self-sufficiency, similar to how Apple and Intel manufacture chips on American soil.
What will Terafab manufacture?
The plant will not be a typical factory. Terafab will produce chips optimized for edge computing and inference —processors capable of running artificial intelligence models near where data is generated. These components will be used in Tesla's Optimus humanoid robots, future autonomous Cybercabs, and the company's electric vehicles.
But there will also be space for space. SpaceX needs high-power chips for its orbital data centers and for the spacecraft it plans to send to Mars. The facility will integrate the entire process: manufacturing, packaging, and testing of advanced logic and memory devices. In short, a complete ecosystem under one roof.
Local employment and neighborhood mistrust
Job creation is one of the project's key selling points. At least 3.000 people are expected to work at Terafab , many of them from Grimes and neighboring Brazos County. The companies say that between 60% and 80% of new hires at their Texas facility are local residents, a trend they hope to continue.
However, it's not all good news. Nearly 900 residents have submitted a petition demanding stricter environmental controls. They fear that a facility of this size will deplete water resources, increase electricity consumption, and generate pollution. SpaceX has responded by assuring residents that there will be no problems, but mistrust persists.
Musk's ecosystem in Texas
Terafab is not an isolated project. It's part of a broader strategy to reduce dependence on external suppliers and control the entire value chain. Musk has already stated that the gap between chip supply and demand is the main reason for this investment. And he's not wrong: artificial intelligence, robotics, and space exploration increasingly demand more computing power.
The plant also reinforces Texas's position as a technology hub. With SpaceX's headquarters, Tesla's factory, and now Terafab, the state is solidifying its status as a magnet for the semiconductor industry. Meanwhile, Europe and Asia are watching closely, because the balance of power in chip manufacturing is shifting.
In short, Terafab is a bold move that could redefine the industry. With an initial investment of $16.800 billion, the creation of thousands of jobs, and processing capacity exceeding one terawatt, Tesla and SpaceX are seeking to secure their technological future. The risks are high, but Musk has never shied away from challenges. Now, all that remains is to wait for the machines to start operating.
