SpaceX · 2026-05-06 · major
SpaceX 'Terafab' — $55B First Phase, $119B Cap on a 2nm Texas Chip Mega-Fab for AI
Grimes County tax filing reveals SpaceX-Tesla-xAI joint venture Terafab — a vertically integrated 2nm fab targeting AI servers, Tesla autonomy, robots, and Starlink, with Intel as manufacturing partner.
SpaceX, Tesla, xAI, and Intel team up on a $55–119B Texas mega-fab to make AI chips in-house.
Key specs
| Phase 1 capex | $55B |
|---|---|
| Total capex cap | $119B |
| Process node | 2 nm |
| Location | Grimes County, TX |
What is it?
Terafab is a multi-phase semiconductor manufacturing and advanced computing fabrication facility being filed for in Grimes County, Texas, on a 1,000+ acre site that previously hosted the Gibbons Creek Reservoir coal plant. It is a joint venture of SpaceX, Tesla, and xAI, with Intel joining in April 2026 as strategic manufacturing partner.
How does it work?
First-phase capital expenditure is $55 billion, with a stated cap of $119 billion across multiple build phases. The facility is designed to produce advanced 2-nanometer chips for AI servers, Starlink satellites, SpaceX's planned space-based data centers, Tesla autonomous vehicles, and Tesla/Optimus robots. Long-term goal is to ship enough silicon to power 1 terawatt of compute annually. Grimes County Commissioners Court holds the public hearing on the property tax abatement on June 3.
Why does it matter?
Frontier AI labs and their hardware suppliers spent 2024–2025 fighting over fixed Nvidia/TSMC supply. With Terafab, Musk's combined SpaceX-xAI entity (post-merger valuation ~$1.25T) is signaling it intends to vertically integrate chipmaking instead of being a customer. If the abatement clears, this is the largest single private chip-fab investment ever announced in the US.
Who is it for?
AI infrastructure watchers, semiconductor industry, Texas economic development
Try it
Public hearing 9 a.m. CT, June 3, 2026, Grimes County Justice & Business Center