SpaceX is spending $16.8 billion on a Texas chip fab Musk says will be '50 times the size of the Pentagon'

SpaceX and Tesla have pledged a staggering $16.8 billion to construct a colossal chip manufacturing facility in Texas, dubbed TeraFab. This behemoth could span over 100 million square feet upon completion, potentially dwarfing even the Pentagon, which occupies 6.6 million square feet. Musk has described TeraFab as the largest and most valuable structure on Earth, should it ever reach its full size, a figure that would require TeraFab to exceed 330 million square feet when finalized.

The Texas initiative first surfaced in November 2025 as Tesla sought to address its growing computing needs. Following an announcement in March 2026, the project became a joint venture between SpaceX, Tesla, and Intel. TeraFab is designed to produce semiconductors for space computing, advanced vehicles, and humanoid robotics. While the initial construction phase is estimated at $55 billion, the project could ultimately see spending of up to $119 billion, according to recent filings.

SpaceX anticipates the facility to employ at least 3,000 workers, including personnel from nearby counties. The companies have also taken steps to mitigate environmental impacts, committing to using water from Gibbons Creek Reservoir and implementing wastewater treatment processes. These actions aim to ensure the industrial operations align with strict environmental regulations.

SpaceX and Tesla’s combined demand for chips is projected to exceed 1 terawatt (TW) of compute, marking a significant scale-up in industrial endeavors.