Musk confirms $16.8bn Terafab chip campus in Texas

What happened: Tesla and SpaceX, both led by Elon Musk, confirmed Terafab on 6 August 2026 — a vertically integrated chip-making campus in Grimes County, Texas, about an hour north-west of Houston.

The numbers: The first phase carries a $16.8 billion price tag, well below the roughly $55 billion first-phase figure floated in May county filings, out of a total plan that could reach $119 billion. The site would span more than 100 million square feet and create at least 3,000 jobs.

The details: Terafab will handle logic, memory, packaging and testing in-house, producing two custom 2-nanometre chip families: one for Tesla cars and Optimus robots, another for SpaceX's orbital data-centre satellites. Water will come from the Gibbons Creek Reservoir, previously used to cool a coal plant shut in 2018.

Why it matters: The campus would be more than twice the size of Tesla's 2,500-acre Austin site. Musk has called it the largest and most valuable building on Earth.

The context: Musk first unveiled Terafab in March in Austin as a joint Tesla-SpaceX-xAI venture.

Who's affected: Texas is backing the project through its JETI programme, a $30 million Texas Enterprise Fund grant and a 10-year 100% local tax abatement. In return, SpaceX must pay the county $20 million a year for 35 years, invest at least $5 billion by 2030, and create 1,800 full-time jobs by 2035.

In their words: Musk said: "We're now embarking on the most epic chip-building effort."

The catch: SpaceX describes the plan as a framework rather than binding commitments. No construction start date or intellectual-property split between Tesla and SpaceX has been finalised.

What's next: Confirmation of a build timeline and the companies' final ownership split over the chip designs will determine how quickly Terafab moves from framework to construction.