HAWTHORNE, Calif. — A public hearing is scheduled for June 3 in Grimes County, Texas, where local officials will consider a property tax abatement agreement for the Terafab project — a proposed $119 billion semiconductor manufacturing campus backed by SpaceX, Tesla, and xAI, along with chipmaking partner Intel.
The Grimes County filing describes Terafab as a "multi-phase, next-generation, vertically integrated semiconductor manufacturing and advanced computing fabrication facility." The first phase carries an estimated price tag of $55 billion, with total project costs potentially reaching $119 billion depending on buildout scope.
The Problem Musk Is Trying to Solve
The logic behind Terafab is straightforward, if audacious. Elon Musk has been vocal about a central bottleneck facing his companies: chips. xAI's Colossus supercluster in Memphis is already one of the world's largest AI training facilities, but Musk has argued that even it won't be enough as Grok models scale toward trillions of parameters. SpaceX needs chips for next-generation satellites and its proposed space-based data center network. Tesla's autonomous driving and Optimus robotics programs are voracious consumers of AI silicon.
"We either build the Terafab or we don't have the chips, and we need the chips, so we build the Terafab," Musk wrote on X earlier this year.
Intel as the Manufacturing Partner
Perhaps the most notable element of the Terafab plan is the inclusion of Intel, which signed on in April 2026 as the primary chipmaking partner. The collaboration gives SpaceX, Tesla, and xAI access to Intel's advanced node manufacturing process at a time when TSMC capacity remains constrained and NVIDIA supply chains are a limiting factor for the entire AI industry.
The facility is designed to produce chips for AI servers, next-generation satellites, SpaceX's proposed data center in space, autonomous Tesla vehicles, and humanoid robots. Musk has described the ambition as manufacturing enough chips to provide 1 terawatt of compute per year — a figure that would dwarf any existing semiconductor campus.
Grimes County and the Path Forward
The June 3 hearing is focused on a property tax abatement that would lower the cost basis for the project and accelerate site selection. Musk has noted that Grimes County is one of several locations under active consideration, so the proceedings represent an important but not final step.
Should the abatement be approved and Grimes County selected, construction timelines and phasing schedules are expected to follow later in 2026. The Terafab project, if fully realized, would represent the single largest private semiconductor investment in U.S. history — and a decisive bid by Musk to ensure his companies never face an AI chip shortage again.
