Tesla and SpaceX to Build World's Largest Semiconductor Factory 'Terafab' in Texas

Tesla and SpaceX have officially confirmed plans to construct a massive semiconductor manufacturing facility named 'Terafab' in Grimes County, Texas, USA. If fully completed as planned, this facility will become the world’s largest single building by floor area.

The site is located on the outskirts of Houston, within close proximity to the Houston metropolitan area. Tesla and SpaceX formally announced the project on August 6, emphasizing that the move aims to significantly boost domestic U.S. chip production capacity to meet the enormous future demand for high-performance computing chips from both companies.

Elon Musk stated on X (formerly Twitter) that Terafab will be 'the largest and most valuable building on Earth, by a considerable margin.' In terms of scale, it will be more than five times larger than the New Century Global Center in Chengdu, China, which spans approximately 18.9 million square feet, and far exceeds the Pentagon in the U.S. (6.6 million sq ft) and Apple Park in California (about 2.82 million sq ft).

Musk emphasized that the building will not only be massive in size but also aesthetically striking. He wrote that the structure 'will be extremely beautiful.' In another post, he described the goal as creating a 'science fiction city'-like environment.

The two companies explained that the core reason for building Terafab is the anticipated demand for advanced semiconductors, which they expect to far exceed the supply capacity of existing and future global production. Tesla stated on X: 'The number of chips Tesla and SpaceX will need in the future will vastly exceed what current and future global production capacity can provide.' The company has set a target to produce over one terawatt of computing power annually.

Terafab will integrate logic chips, memory, packaging, and testing processes within a single campus, forming a complete production chain from design to finished products. SpaceX stated that the facility will serve as an advanced semiconductor manufacturing plant, bridging the gap between current global chip supply and future computing demands.

The chips produced will support several key projects under Musk’s umbrella, including Tesla’s Optimus humanoid robot, the Cybercab autonomous taxi, and SpaceX’s planned space data center.

In terms of employment, Terafab is expected to create at least 3,000 jobs. Tesla and SpaceX stated they will prioritize hiring talent from Grimes County and neighboring Brazos County. The companies noted that from their hiring experiences at other Texas sites, approximately 60% to 80% of employees come from local communities.

The factory site is adjacent to the Gibbons Creek Reservoir. This reservoir was previously used to cool a coal-fired power plant, which was shut down in 2018. SpaceX explained that the factory will use water from the reservoir and will not draw from local groundwater.

However, the development plan has drawn opposition from some residents. On August 5, hundreds of residents attended a public hearing in Grimes County to voice concerns, primarily questioning the tax incentives offered by local governments and the lack of transparency during the development process.

According to The New York Post, the office of Texas Governor Greg Abbott has proposed a $30 million grant from the 'Texas Enterprise Fund' to SpaceX as an incentive for the project.