SpaceX, Tesla Confirm Terafab Site as Chip Demand Outruns Global Supply

SpaceX and Tesla confirmed Grimes County, Texas as the permanent site for Terafab, their large semiconductor manufacturing venture aimed at easing a major chip supply shortage. The project is moving from planning to execution, with foundation prep set to begin almost immediately, renderings due within days, and construction expected within months. SpaceX made a $10 million payment to satisfy a tax-abatement deadline tied to the June agreement. The full buildout could cost $55 billion in phase one and up to $119 billion overall, targeting 1 terawatt of annual AI compute capacity and 1 million wafer starts per month. The announcement reinforces Tesla and SpaceX’s long-term demand for chips and highlights supply constraints at major foundries, which could have strategic implications for semiconductor capacity and related tech supply chains.