In an agricultural region approximately 120 km northwest of Houston, contractors have begun clearing land for construction that, according to Elon Musk, will be the largest building in history. This project, named Terafab, is a joint venture between Tesla and SpaceX.
The main goal of the project is narrow, despite its scale: to produce artificial intelligence chips required by Musk's companies, which they cannot acquire in sufficient quantities from other suppliers. According to Musk's vision, the single facility must provide one petawatt of computing power annually.
Musk stated on X on August 6th, accompanying initial visualizations, that 'Terafab Texas will undoubtedly be the largest and most valuable building on Earth.' He also noted that it would be 'strikingly beautiful.'
Over four planned phases, this complex is expected to cover about 9.3 million square meters of production space, distributed across four enormous rectangular buildings, with the largest reportedly measuring about 4 km in length.
For comparison, the area planned for Terafab would cover the center of Cape Town almost six times (the central improvement district covers 1.6 km²). Other analogies include seven and a half V&A waterfronts or roughly two-thirds of the entire Or Tambo airport territory. When compared to sports facilities, it is equivalent to the Loftus Versfeld field laid out approximately 1300 times.
The financial investment is also colossal. Tesla and SpaceX have allocated $16.8 billion for the first phase, which amounts to about 271 billion Rands at the current exchange rate. According to available data, the total cost of all four phases could reach $119 billion, approximately equivalent to 1.9 trillion Rands. Meanwhile, the entire consolidated South African government budget for 2026/2027 is 2.67 trillion Rands. Thus, one project on one site in Texas, spread over a decade of construction, could cost approximately 70% of the annual expenditure of the South African government.
Terafab is expected to employ at least 3000 people, but the company's commitment is less stringent. As part of a tax agreement with Grimes County, the company must spend no less than $5 billion by the end of 2030 and create 1800 full-time jobs by the end of 2035. In return, it will receive ten years of county property tax exemptions and a state grant of $30 million.
Musk's justification is that Tesla, SpaceX, and xAI are already utilizing a significant portion of the world's available contract chip manufacturing capacity. According to SpaceX's own projections, the combined future demand from these companies will exceed the capabilities of the global industry. Musk noted that production rates are 'much lower than we would like' and concluded: 'Either we build Terafab, or we won't have chips, and we need chips, so we build Terafab.'
Musk, known for his tendency towards exaggeration, called it 'the most epic chip-making exercise in history.' The goal is to produce chips for Tesla's Optimus robots and Cybercab, as well as radiation-hardened processors for planned SpaceX orbital data centers.
Terafab is also designed to house logical fabrication, memory production, advanced packaging, testing, and photolithography manufacturing on a single site. This will eliminate the need to send design iterations across continents—a combination Musk mentioned at the launch event that is absent globally.
When asked about the ultimate purpose of all this, he went beyond the balance sheet. Quoting Isaac Asimov and Iain Banks, as well as the concept of humanity as a galactic civilization, he stated: 'We want to make it real. Not just science fiction, but turn science fiction into scientific fact.'
Intel is the technological partner, and it is reported that Tesla was the first major client for this company's 14A process in April. Intel committed to ensuring high-volume production of 14A (1.4-nanometer) in 2028, although it did not publicly confirm the mandatory Terafab contract.
The plant is not expected to draw power from the Texas grid. SpaceX will build its own gas power plants on-site, which will operate alongside 'very large battery banks,' as described by the company's head of energy, Riley Trettel. Water will be sourced from the Gibbons Creek dam, not local groundwater.
Some points remain uncertain. The start date of construction has not been confirmed, and the project price fluctuated between $20 and $25 billion at the outset over five months, then $55 billion in SpaceX's May prospectus, and subsequently $16.8 billion for the first phase with a ceiling of $119 billion. This prospectus described Terafab as a general structure without commitments. Semiconductor analyst Mark Lapidus estimates the probability that the project will never happen at 80%, noting that none of the companies have previously managed a factory.
The latest test flight of the Starship rocket, developed by SpaceX, culminated in an impressive landing in the Indian Ocean. For the first time, the vehicle managed to survive the return, remaining intact even after colliding with the sea.
A rescue operation of the structure recently began. The company's intention is to tow the rocket towards the coast of Western Australia so that the results of the most recent launch can be analyzed. However, this plan may not materialize.
The thirteenth test flight of Starship occurred on July 24th. The vehicle, which is 124 meters tall, was launched from the Starbase facility located in southern Texas, United States. After takeoff, the Super Heavy booster fell into the Gulf of Mexico, while the upper stage traveled more than 16,000 kilometers before executing a controlled landing in the Indian Ocean.
According to SpaceX, the water landing was the smoothest ever achieved by Starship, allowing the spacecraft to remain almost intact and float for several days after the mission. In addition to confirming the controlled landing capability, the launch also placed 20 Starlink V3 satellites into orbit, proving that Starship already has the potential to rapidly expand the company's internet network.
Starship is described as the most powerful and largest rocket ever built, reaching approximately 124 meters in height. Both the Ship stage and the Super Heavy booster were designed to be fully and rapidly reusable, which SpaceX considers an advancement capable of transforming space exploration.
Tesla and SpaceX have confirmed the development of Terafab, a large semiconductor factory located in Texas, which will receive an initial financial injection of $16.8 billion, equivalent to about R$ 86 billion. This undertaking aims to establish its own infrastructure to meet the growing demand for chips destined for artificial intelligence.
According to information released by the Texas government, the unit will be installed in Grimes County, near Houston, and will feature an area exceeding 100 million square feet dedicated to semiconductor manufacturing. Terafab is expected to generate employment for at least 3,000 people in the region, centralizing various stages of chip production in one location, including fabrication, assembly, and testing of advanced components.
SpaceX stated that the facility was designed to 'build new computing capabilities on an unprecedented scale and speed.' The chips produced there will be used in technologies developed by the company, such as the Optimus robots, Cybercab autonomous vehicles, and future space data centers.
Among the main purposes of Terafab is the ambition to achieve an annual production exceeding 1 terawatt of computing capacity. If implemented as planned, this project has the potential to become one of the largest private chip manufacturing initiatives ever announced, demonstrating Tesla and SpaceX's desire to participate in both AI product development and the essential infrastructure for its operation.
Although the announcement has been made, Terafab is still in the initial phase. The initial investment of $16.8 billion is less than the $25 billion (approximately R$ 128 billion) mentioned in the original project launch. However, SpaceX communicated that future expansion phases could significantly raise the total cost, citing in previous documents a plan that could reach $119 billion (about R$ 609 billion).
Currently, Tesla relies on third-party suppliers, such as Samsung and TSMC, for its chips. The creation of Terafab constitutes a strategic attempt to reduce this dependence in the future. Furthermore, SpaceX informed that it will use water from the Gibbons Creek reservoir, which previously served to cool a coal power plant decommissioned in 2018, aiming to avoid using local underground reserves.
This project fits into Elon Musk's strategy to expand the computational power available to his companies. Tesla emphasized that 'both Tesla and SpaceX will need far more chips than current and future global production can provide.'
