Grimes County Approves Terafab: SpaceX, Tesla, and Intel's Mega Chip Factory in Texas

Grimes County (Texas) has given the green light to one of the largest industrial projects in U.S. history: Terafab, the semiconductor megafactory powered by SpaceX, Tesla, and Intel. On Wednesday, June 4, 2026, commissioners approved by 4 votes to 1 both the reinvestment zone and a 100% tax abatement for the complex.

What is Terafab

Terafab would be a vertically integrated chip manufacturing facility: logic, memory, and advanced packaging under one roof. The semiconductors would be destined for Tesla products (FSD, Optimus), SpaceX/xAI hardware, and future orbital data centers. The planned process node includes Intel 14A, according to leaks cited by Reuters and Bloomberg.

Location and Scale

• Site: Area of the former Gibbons Creek Reservoir and dismantled power plant, East Texas.
• Initial Investment: Approximately $55 billion in the first phase.
• Total Expansion: Up to $119 billion if all phases are executed.
• Ambition: To contribute up to one terawatt of AI compute capacity per year, according to the project presentation.

The Tax Agreement

The 100% abatement does not mean the county is giving up taxes forever: County Judge Joe Fauth explained to KBTX that, in the long term, the project could generate about $700 million in revenue over 35 years, in addition to advance payments for local infrastructure and municipal staff salary adjustments.

Relationship with Tesla

In the last earnings call, Musk indicated that Tesla would build a semiconductor lab at Giga Texas (~$3 billion, thousands of wafers per month) while SpaceX leads the initial scaled phase of Terafab. The binding financial terms between the three companies are not yet finalized in public documents.

Fauth noted that construction could begin before the end of the year following the approval. Teslarios is not affiliated with SpaceX, Tesla, or Intel.