SpaceX and Tesla have formally confirmed the site for Terafab, an enormous artificial intelligence chip manufacturing complex being developed in partnership with Intel and xAI, moving the ambitious project from paperwork toward ground-breaking as Elon Musk's companies contend with a chip supply gap they say existing global manufacturers cannot fill.

According to a report from Benzinga, the confirmation followed a $10 million payment SpaceX sent to Grimes County, Texas, earlier this week, satisfying a deadline built into a tax abatement agreement the two sides signed in June. Foundation preparation is expected to begin almost immediately, with construction renderings expected within days and physical construction to follow within months, according to Teslarati.

The Terafab is going to become the largest and most valuable building on Earth by a long shot.This is so much more than just another semiconductor fab. It’s going to be @Tesla, @SpaceX, xAI, and Intel building what will become the most important AI manufacturing complex EVER… pic.twitter.com/NebcmBQOtY— Teslaconomics (@Teslaconomics) August 6, 2026

The Terafab is going to become the largest and most valuable building on Earth by a long shot.This is so much more than just another semiconductor fab. It’s going to be @Tesla, @SpaceX, xAI, and Intel building what will become the most important AI manufacturing complex EVER… pic.twitter.com/NebcmBQOtY

Why This Particular Site

SpaceX selected the Gibbons Creek Reservoir, the former home of the Gibbons Creek Steam Electric Station, as the location for the full-scale facility, citing the site's rainwater storage capacity and its proximity to Houston's labor pool, with more than 15.9 million people living within a three-hour radius of the property. The company plans to power the complex using its own natural gas plants rather than drawing electricity from Texas's ERCOT grid, and........

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