VIDEO: Tesla, SpaceX Plan $16.8 Billion Texas Chip Megafactory

Tesla and SpaceX said Thursday they are building Terafab, a jointly developed semiconductor megafactory in Grimes County, Texas, with a first phase priced at $16.8 billion.

The finished complex is slated to exceed 100 million square feet, according to a SpaceX update. Elon Musk, who runs both companies, called the facility “the largest and most valuable building on Earth by far.”

If completed as planned, Terafab would become the world’s largest building, the New York Post reported. The current record holder is China’s New Century Global Center in Chengdu at about 18.9 million square feet; Terafab would be more than five times that size and would also dwarf the Pentagon, Apple Park and the Mall of America.

Renderings show a sprawling, wing-shaped structure in the Texas landscape with a translucent roofline. Musk wrote on X that “It will be stunningly beautiful,” and added in another post, “Sci-fi city is what we’re aiming for.”

Tesla wrote on X that “Both Tesla & SpaceX will need far more chips than current & future global production can supply,” with a goal of “producing over 1 terawatt of compute per year.” SpaceX said the site will handle logic chips, memory, packaging and testing under one roof, and described it as an advanced semiconductor fab meant to bridge current chip supply and future compute demand. The companies said Terafab will produce chips for Tesla Optimus robots, self-driving Cybercabs and SpaceX space-based data centers.

The project is expected to create at least 3,000 jobs, with hiring expected to draw from Grimes County and neighboring Brazos County. Tesla and SpaceX said 60% to 80% of new hires at their other Texas sites have come from local residents. Total investment across all planned phases could reach $119 billion, while Intel has confirmed it will contribute to Terafab without detailing its role.

Terafab will sit on the Gibbons Creek Reservoir, once used to cool a coal-fired power plant that shut down in 2018. SpaceX said it plans to draw water from the reservoir rather than local groundwater. Hundreds of residents attended a county meeting Wednesday to raise concerns about tax incentives and what they called a lack of transparency in the deals, while Consolidated Independent School District Superintendent Sarah Borowicz called the moment defining for the district. Texas Gov. Greg Abbott’s office extended a $30 million Texas Enterprise Fund grant to SpaceX, and the project also qualifies for the state’s Texas Jobs, Energy, Technology and Innovation program.