# Musk's Mega Chip Factory: Terafab A chip production facility five times larger than the world's current biggest building is coming. - **Source:** [Fortune](https://fortune.com) - **Published:** 2026-08-10 - **Topic:** [Business](https://brifing.si/c/business) - **Original article:** - **On Brifing:** https://brifing.si/s/58806efc-a248-4b10-a8d0-d64c813ed3aa ## A project of colossal scale Elon Musk's SpaceX and Tesla are building a 100-million-square-foot semiconductor manufacturing facility in Grimes County, Texas. Named Terafab, the facility will be five times larger than the current world's largest building, China's New Century Global Center. The first phase involves a $16.8 billion investment and will create 3,000 new jobs, marking a significant leap in manufacturing capacity. ## Vertical integration ambition Terafab aims to be more than just a conventional semiconductor factory. The facility is designed to combine logic chips, memory chips, and advanced packaging processes under one roof. Musk plans to produce over 1 terawatt of computing power annually through this vertical integration. This capacity is crucial for both Tesla's vehicles and SpaceX's space exploration projects. ## Chip production for the space age Musk states that Terafab prepares for the era of space travel. The facility targets economies of scale in AI chip production to meet Earth's and space's demands. Project goals include launching 10 million tons of mass into orbit annually and manufacturing 1 million Tesla Optimus robots. These objectives directly connect to Musk's vision of a galactic civilization. ## Texas's economic gambit Texas Governor Greg Abbott sees the project as a major opportunity for the state's economy. A $30 million Texas Enterprise Fund grant has been allocated for Terafab. The project aims to strengthen Texas's leadership in technology and energy sectors. Abbott emphasized the investment's significance, stating, 'Big ideas grow even bigger in Texas.' ## Tax incentive controversy Terafab is requesting tax breaks from local governments to reduce construction costs. The project seeks to freeze school property taxes at 48% of appraised value for 10 years. The company warns that without these incentives, the project might relocate to competing regions like Arizona. State support is being pursued through the Texas Jobs, Energy, Technology, and Innovation (JETI) program. ## Financial risks and opportunities Despite raising $75 billion in its IPO, SpaceX reported a $541 million loss in its first quarterly earnings. The $16.8 billion initial investment in Terafab represents only part of the total projected costs. Musk hopes taxpayers will shoulder some expenses. Investors continue questioning the financial viability of Musk's ambitious projects amid these substantial figures. ## Industrial-scale innovation Terafab's 100-million-square-foot area dwarfs Tesla's 10-million-square-foot Gigafactory Texas by tenfold. Designed for 'terawatt-scale' production, the facility could fill a critical gap in global semiconductor supply chains. The project aims to reduce U.S. dependence on Asian chip manufacturing, potentially reshaping industry dynamics. ## The manufacturing hub of tomorrow Terafab isn't just a factory—it's set to become a cornerstone of Musk's technology empire. By producing chips essential for AI, robotics, and space technologies, the facility aims to dominate one of the 21st century's most strategic industries. If successful, it could redefine the global technology and manufacturing landscape for decades to come. ## Sources covering this story - https://fortune.com/2026/08/10/elon-musk-chip-factory-spacex-tesla-texas/ — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._