According to iThome and CNA reports, Texas Governor Greg Abbott announced on August 6, 2026 that SpaceX and Tesla will build the AI chip plant Terafab in Grimes County, Texas, with a first-phase investment exceeding $16.8 billion expected to create 3,000 jobs, with Intel joining as a process partner.
Terafab's Formal Announcement and Key Players
Texas Governor Greg Abbott announced on Thursday, August 6, 2026, that SpaceX will build a vertically integrated AI chip plant called Terafab in Grimes County, Texas. The first-phase investment exceeds $16.8 billion and is expected to create 3,000 jobs, according to iThome (ithome.com.tw).
iThome also reports that Terafab was first unveiled by Elon Musk in March 2026 as a joint project between SpaceX and Tesla, with Intel (英特爾) participating in process development.
Investment Scale: What Was Reported and How It Grew
According to CNA (cna.com.tw), SpaceX and Tesla's initial commitment to Terafab is $16.8 billion (approximately NT$540.8 billion). But filings and earlier reporting point to a much larger long-term plan, and the two available sources describe the earlier stage differently:
| Source | Date of Filing/Report | Reported Initial/Phase-One Figure | Reported Total If Fully Expanded |
|---|
| iThome, citing Reuters | 2026-05 | $55 billion (phase one) | Up to $119 billion |
| CNA | 2026-05 | $5 billion (initial proposal) | Up to $119 billion (~NT$3.8 trillion) |
| Official announcement (Gov. Abbott) | 2026-08-06 | $16.8 billion (confirmed first phase) | — |
Both sources agree that a May 2026 SpaceX filing pointed to a total build-out potentially reaching $119 billion, but they cite different figures for the earlier-stage investment ($55 billion per iThome/Reuters versus $5 billion per CNA) — a discrepancy the two reports do not reconcile. What both outlets confirm is that the $16.8 billion figure announced on August 6 is the amount now formally committed for the first phase.
Plant Scale, Production Scope, and Facility Design
Terafab will occupy 100 million square feet — about 9.3 million square meters, according to iThome, or roughly 2.81 million ping according to CNA's conversion. CNA reports the facility is designed with a high degree of vertical integration, covering the manufacturing, packaging, and testing of both advanced logic and memory chips.
Per CNA, the plant will produce processors for Tesla's humanoid robot Optimus and its Cybercab autonomous vehicle, as well as high-performance chips for SpaceX's space-based data centers.
Intel's Role in Process Development
iThome reports that Intel is participating in Terafab's process development alongside SpaceX and Tesla. CNA adds that SpaceX formed a partnership with Intel earlier in 2026 to advance the project, noting that Intel has been actively expanding its foundry business as part of its own transformation plan.
Computing Power Needs and Early Engineering Work
According to iThome, SpaceX and Tesla estimate that their combined AI applications will eventually require more than 1 terawatt of computing power — a level of demand the companies say current global chip production capacity cannot meet, prompting the decision to build a dedicated supply chain.
Ground-level preparation began well before the formal announcement: CNA reports that Tesla started building a research-and-development center at the north campus of its Giga Texas facility in April 2026, describing it as preliminary engineering work for Terafab.
Texas Incentives and Resource Planning
iThome reports that the Texas state government will provide a $30 million grant to the project along with tax incentives typically extended to large-scale investments.
On resources, CNA reports that Terafab's Grimes County site sits near the Gibbons Creek Reservoir, and that the two companies plan to draw water from the reservoir to operate the plant rather than pumping groundwater.
Strategic Significance and SpaceX's Broader Ecosystem
Elon Musk framed the project in comments cited by CNA: "Terafab is bringing the most advanced manufacturing capabilities to America, creating thousands of high-paying jobs in the Lone Star State, and will let us mass-produce AI chips for use on Earth and in space."
CNA also notes that Terafab arrives alongside other moves in Musk's corporate structure: SpaceX acquired the AI startup xAI, which he founded, earlier in 2026 with the stated goal of building space-based data centers, and the merged company completed what CNA describes as the largest initial public offering (IPO) in history in June 2026.
What This Means
The evidence, taken together, points to Terafab as the manufacturing answer to a specific capacity problem: SpaceX and Tesla say their AI workloads will eventually need more than 1 terawatt of computing power that current global chip supply cannot cover, and Terafab's vertically integrated design — spanning logic and memory chips for Optimus, Cybercab, and SpaceX's space data centers — is built to serve exactly that combined Earth-and-space demand. The Intel partnership, described separately by both outlets, positions an established foundry player alongside SpaceX and Tesla rather than leaving them to develop leading-edge process technology alone. And while the two reports disagree on the size of the project's earliest-stage figure ($55 billion versus $5 billion), they converge on the same ceiling — up to $119 billion if the full build-out proceeds — framing the $16.8 billion now committed as a confirmed first installment against a much larger long-term plan, backed by a $30 million state grant and a water-sourcing plan built around the Gibbons Creek Reservoir rather than groundwater.