SpaceX JV Targets Texas Chip Campus Near College Station

SpaceX, Tesla, and xAI are moving forward with plans for a massive semiconductor manufacturing campus in Texas as Elon Musk pushes to secure chip supply for his expanding AI and computing ambitions. Commercial Property Executive reports the proposed “Terafab” facility could rise near College Station in Grimes County, roughly midway between Houston and Austin, according to reporting from the Houston Chronicle.

The joint venture currently estimates the project will cost $55B, though officials said the campus could eventually expand into a $119B development. Production is expected to begin in 2027 if local approvals move ahead on schedule.

Why Grimes County Landed the Project

The proposed site sits near the Gibbons Creek Reservoir in Grimes County, about 84 miles northwest of downtown Houston and 125 miles east of Austin. Local officials are expected to review a potential tax abatement package during a June meeting, according to the Houston Chronicle.

Musk unveiled Terafab plans in March 2026. He said existing chip suppliers may not meet demand from Tesla, SpaceX, and xAI. The project also supports federal efforts to reshore semiconductor manufacturing. Those efforts gained momentum after supply chain disruptions and rising geopolitical tensions overseas.

The Details

Terafab aims to manufacture chips capable of supporting 1 terawatt of computing power annually. Musk said that output would equal roughly double the current annual electricity consumption tied to US computing demand.

The development could include two separate fabrication plants producing chips for different applications, including AI systems and space-based data centers. Intel is expected to participate in portions of the fabrication process, while Tesla’s existing Austin Gigafactory may support research and development tied to the project.

Tesla has already filed plans for a 2M-square-foot R&D facility adjacent to its Austin manufacturing campus. That expansion would likely handle advanced research functions for Terafab while the larger-scale chip production occurs in Grimes County, where land constraints are less restrictive.

Texas’ Semiconductor Boom Keeps Growing

The Terafab proposal lands as Texas rapidly expands its role in domestic semiconductor manufacturing. Samsung’s Taylor, Texas, semiconductor plant remains one of the state’s largest active industrial developments after the company committed billions to advanced chip production.

Tesla and Samsung deepened their partnership in 2025 through a reported $16.5B agreement to produce Tesla’s AI5 and AI6 chips. That deal reportedly helped accelerate Samsung’s delayed Taylor facility by securing a major long-term customer pipeline.

Samsung originally selected Taylor for the project in 2021 and broke ground in 2022. The plant is now expected to begin operations in 2026 after roughly two years of delays tied partly to slower-than-expected customer commitments.

Texas continues attracting major advanced manufacturing projects thanks to its large industrial sites, lower power costs, and expanding infrastructure network. According to CBRE’s 2025 US Life Sciences and Technology report, Texas ranks among the country’s fastest-growing semiconductor markets. That momentum also includes new semiconductor research and workforce initiatives tied to Texas A&M and other regional institutions.

Why It Matters

Terafab would rank among the largest industrial manufacturing investments in US history if fully built out. The project reflects how AI demand is reshaping commercial real estate, particularly across industrial, power, and infrastructure-heavy asset classes.

Large-scale chip manufacturing needs huge land sites, reliable utilities, and long-term power capacity. Texas has spent years building advantages in each area. The proposed campus also shows how AI infrastructure now drives industrial development beyond traditional logistics projects. Hyperscale computing facilities increasingly shape site selection, power planning, and construction activity. 

The project could also boost Central Texas industrial markets. Suppliers, contractors, and data infrastructure firms may all see rising demand. Workforce housing demand near the site could increase as well.

What’s Next

Grimes County officials are expected to review tax incentives tied to the project in June, marking one of the first major public steps for the development. Additional details around financing, permitting, and utility infrastructure will likely emerge later this year.

Construction timelines remain aggressive, with production targeted for 2027. Market watchers will also be tracking whether Terafab expands beyond its initial $55B phase toward the larger $119B buildout outlined in early project discussions.