The Numbers Come First
The scale is without precedent. SpaceX and Tesla are constructing Terafab, a 100-million-square-foot semiconductor manufacturing facility in Grimes County, Texas — more than five times the size of the New Century Global Center in Chengdu, China, which at roughly 18.9 million square feet currently holds the record for the world's largest building.
Texas Gov. Greg Abbott confirmed in a press release that 'the first phase of the Terafab project represents a capital investment of more than $16.8 billion and will create 3,000 new jobs.' Abbott also announced a $30 million Texas Enterprise Fund grant extended to SpaceX as part of the state's commitment to the project.
One Roof, Full Stack
Terafab is not a conventional chip foundry. The project is designed as a vertically integrated operation combining logic, memory, and advanced packaging under a single roof. 'We're now embarking on the most epic chip-building effort — combining logic, memory, and advanced packaging all under one roof,' Musk said in a press release.
The facility is designed to produce more than 1 terawatt of compute annually. Both SpaceX and Tesla expect their combined demand for computing power to eventually exceed that threshold. The Terafab website ties the factory to a broader infrastructure vision that includes as many as 1 million Tesla Optimus robots, 10 million tons of mass launched into orbit annually, and more than 1 terawatt of solar power.
'Terafab is bringing cutting-edge manufacturing to America, creating thousands of high-paying jobs,' Musk continued, 'and enabling us to produce AI chips at scale for use on Earth and in space.'
The Tax Incentive Question
Terafab has filed eight tax incentive applications with two local school districts, asking to freeze school maintenance and operations property taxes at roughly 48% of appraised value for 10 years per phase. The project is also asking the state to cover the difference in maintenance and operations and interest and sinking taxes through the Texas Jobs, Energy, Technology, and Innovation — or JETI — program.
The applications are candid about the leverage involved. 'Absent the limitation, the project IRR would fall below the minimum investment threshold, and competing jurisdictions (e.g., Arizona) would present a more favorable after-tax return,' the application read, 'in which case the project would likely be relocated outside Texas.'
SpaceX, which went public in June raising $75 billion by selling 555.56 million shares at $135 apiece, reported a $541 million loss in its first quarterly earnings report as a public company despite generating $7.8 billion in revenue. The $16.8 billion announced for Terafab is described as only the initial investment.
CEO Times Editorial Read
Terafab is what American industrial ambition looks like when it is unchained from the permit labyrinths and regulatory timelines that have strangled domestic manufacturing for a generation. A private company is proposing to build the largest structure on Earth, produce AI chips at scale, and anchor a supply chain that currently runs through foreign jurisdictions — and it is doing so in a state that has chosen to compete rather than obstruct.
The tax incentive debate is legitimate and worth watching: taxpayer dollars are real, and school district finances matter. But the alternative written into the application itself — the project moves to Arizona or beyond — is the cost of inaction. Capital rewards clear rules and competitive jurisdictions. Texas made its choice, and the market will render its verdict.
