SpaceX has announced plans to construct a vertically integrated semiconductor fabrication facility in Grimes County, Texas, in a project that represents one of the largest single capital investments in the state's history. The facility, called Terafab, will require more than $16.8 billion in its first phase and is expected to create 3,000 new jobs in the region.

A Facility Unlike Any Other in Chip Manufacturing

The Terafab facility is being described as a first-of-its-kind operation that will consolidate logic, memory, and advanced packaging production under a single roof.

At 100 million square feet, the plant is designed to bring the entire semiconductor production chain into one integrated structure, allowing SpaceX to accelerate chip output at a scale the company says is unprecedented.

SpaceX Founder and Chief Executive Elon Musk said the facility is intended to produce artificial intelligence chips for use both on Earth and in space. "We're now embarking on the most epic chip-building effort, combining logic, memory, and advanced packaging all under one roof in Grimes County, Texas," Musk said in a statement.

"The Terafab is bringing cutting-edge manufacturing to America, creating thousands of high-paying jobs in the Lone Star State, and enabling us to produce AI chips at scale for use on Earth and in space."

Jobs created at the facility will span a range of roles, including engineers, technicians, and plant operator personnel, according to the announcement from Governor Greg Abbott's office.

Texas Incentives Underpin the Deal

The state of Texas has extended a USD 30 million grant to SpaceX through the Texas Enterprise Fund, a performance-based grant program administered by the Texas Economic Development and Tourism Office within the Office of the Governor.

The TEF is designed for business relocation or expansion projects where a Texas site is competing against out-of-state locations to attract capital investment and create jobs.

The Terafab project has also been designated as a qualified project under the Texas Jobs, Energy, Technology, and Innovation program, known as JETI. The JETI program was established when Governor Abbott signed House Bill 5 into law following the 88th Regular Legislative Session.

The program was created to attract large, capital-intensive economic development projects that bring new investment and jobs to Texas while requiring reporting and transparency from participating companies.

Governor Abbott cited the state's business climate, workforce, infrastructure, and logistical advantages as factors in SpaceX's decision to select Texas for the project. "Texas is where big ideas grow even bigger," Abbott said.

"The first-of-its-kind Terafab facility will accelerate chip production in Texas at an unprecedented scale, create thousands of good-paying jobs in Grimes County, and expand economic opportunity for generations of Texans across Southeast Texas and beyond."

Local School Districts Enter Agreements Under JETI

Two Grimes County school districts have entered into agreements connected to the Terafab project under the JETI Act. The Iola Independent School District Board of Trustees voted to enter into an agreement with TeraFab AI, LLC, the entity named in the project's legal filings.

Iola ISD Superintendent Jeff Dyer said the board weighed public input and consulted a school finance expert before making its decision. "The Board's stated priority has always been to do what's best for Iola ISD," Dyer said. "Ultimately, the Board determined that providing the requested tax incentives for this project was in Iola ISD's best interest."

Anderson-Shiro Consolidated Independent School District is also participating. Superintendent Dr. Sarah Borowicz described the agreement as a defining moment for the district.

"We believe this agreement will strengthen our district, expand opportunities, and better prepare our students for their future," she said. "Our commitment now is to ensure that every opportunity created through this agreement is managed wisely, transparently, and always with students at the center of every decision."

Grimes County Positioned as Industrial Hub

Grimes County Judge Joe Fauth III welcomed the announcement, framing it as a transformation for the county. "This is a generational change for Grimes County," Fauth said. "When we can connect a company like SpaceX and the Terafab project to develop an industrial site in Grimes County, that makes all the sense in the world."

The Greater Brazos Partnership, the regional economic development organization serving the area, also expressed support. President and CEO Tom Johnson said the region is prepared to provide the workforce and infrastructure the project demands.

"The region stands ready to deliver the workforce and infrastructure that projects of this scale require, and we look forward to supporting the state, Grimes County, and our local partners as this opportunity moves forward," Johnson said.

Expanding SpaceX's Texas Footprint

The Grimes County announcement adds to SpaceX's already substantial presence in Texas. The company maintains its global headquarters at Starbase, the launch facility in South Texas where its Starship rocket is developed and launched. SpaceX also operates a Starlink manufacturing facility in Bastrop, Texas, where it produces high-speed internet kits for its satellite internet customers worldwide.

The Terafab project marks SpaceX's entry into large-scale semiconductor fabrication, a sector the company says is essential to meeting its future chip needs as it expands operations both in orbit and on the ground.

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