Technology and Science · 07 August, 2026 · 2 min read
SpaceX And Tesla Build $16.8 Billion Terafab Chip Plant Near College Station, Texas
Terafab is a $16.8 billion semiconductor megafactory in Grimes County near College Station. SpaceX will build natural gas power plants and large battery storage for Terafab.
Whether SpaceX will also use solar power for Terafab.
4 of 6 outlets skipped it: terafab will use water from Gibbons Creek Reservoir, not local groundwater.
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TechSpot
“The decision points to the power demands expected from the semiconductor plant.”Read the original ↗
Межа. Новини України.
“Neither Bloomberg’s report nor other publications about Terafab mention ground-based solar power for the facility.”Read the original ↗
Alternative power mix is inconsistently discussed, affecting perception of emissions trade-offs.
Terafab’s $16.8B start
SpaceX and Tesla confirmed on Thursday that they are building a 100-million-square-foot chipmaking facility outside of College Station in Grimes County, Texas, with an initial investment of $16.8 billion for Terafab. Reuters reported that the vertically integrated Terafab plant is intended to make, package and test advanced logic and memory chips under one roof, producing processors for Tesla’s Optimus robots and Cybercabs and high-power chips for SpaceX’s space-based data centers.
The project is expected to employ at least 3,000 people, and Reuters said the facility is planned near the Gibbons Creek Reservoir, whose water the companies plan to use for industrial operations rather than local groundwater. In Grimes County, KBTX said SpaceX representatives told residents that “Now with the JETI done, we are going to be moving nearly immediately to get going on the project,” linking the start of civil work and foundations to the signed agreements.
Power from turbines and batteries
Alongside the chip plant, SpaceX said it will supply power for Terafab itself, with Riley Trettel telling a public meeting in Grimes County, “We’re going to be building natural gas fired power plants, and we’re going to be building very large battery arrays in order to store energy.” TechSpot likewise described the plan as SpaceX building natural gas power plants and large battery systems for the Terafab project, and it said the decision points to the power demands expected from the semiconductor plant.T
Reuters said Terafab is intended to narrow the gap between global chip supply and the more than 1 terawatt of computing power that SpaceX and Tesla expect to need in the coming years, framing the facility as capacity for AI chips used “on Earth and in space.” KBTX added that SpaceX representatives told residents the company will build its own natural gas-fired power plants and that those plants “will be the cleanest per megawatt natural gas facilities in the country,” while also saying SpaceX will not draw from the ERCOT grid in a way that increases costs for other ratepayers.
Jobs, incentives, and scope
Reuters said SpaceX and Tesla expect future expansion phases could push total investment much higher, after a May filing showed SpaceX proposed an initial investment of $55 billion and that the total could rise to $119 billion if extra phases are completed. The Houston Chronicle reported that Terafab is expected to have more than 100 million square feet of manufacturing space and that Grimes County Judge Joe Fauth III called it a “generational change” for the county.
For incentives and commitments, KBTX said the JETI agreements are official and active after being signed by local school districts, SpaceX, and the Governor, and it described phase one as committing to 3,000 permanent jobs. Reuters also quoted Elon Musk saying, “The Terafab is bringing cutting-edge manufacturing to America, creating thousands of high-paying jobs in the Lone Star State,” as the companies race to secure chip capacity for Tesla’s and SpaceX’s computing needs.