RESOLVING THE LEDGER
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Elon Musk is betting that the next phase of his sprawling technology empire will require a building on a scale that has never existed before. SpaceX and Tesla are building Terafab, a 100-million-square-foot semiconductor manufacturing facility in Grimes County, Texas, more than five times the size of the world’s largest building.
“Terafab Texas will be the largest and most valuable building on Earth by far. And it will be stunningly beautiful,” Musk wrote on X.
With about 18.9 million square feet of floor space, the New Century Global Center in Chengdu, China, currently holds the record for the world’s largest building. But Terafab is expected to exceed that quickly: “The first phase of the Terafab project represents a capital investment of more than $16.8 billion and will create 3,000 new jobs,” Texas Gov. Greg Abbott wrote in a press release .
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The accompanying vision is even more ambitious than the building itself. The Terafab website describes the project as a vertically integrated chip factory that will combine logic, memory, and advanced packaging under one roof. Both SpaceX and Tesla will benefit from the facility, which is designed to produce more than 1 terawatt of compute annually.
“We’re now embarking on the most epic chip-building effort—combining logic, memory, and advanced packaging all under one roof,” said Musk in a press release. The project seeks to “close the gap” between the chip production necessary for today and the demand for future production when humanity, according to Musk, eventually embarks on space travel.
“Terafab is bringing cutting-edge manufacturing to America, creating thousands of high-paying jobs,” he continued, “and enabling us to produce AI chips at scale for use on Earth and in space.”
Building a future—vertically
Terafab is less of a conventional semiconductor factory rather than an attempt by Musk to build an enormous piece of his own technology supply chain. Both companies expect their combined demand for computing power to eventually exceed 1 terawatt. Terafab will bring chip manufacturing, packaging, and testing into one singular operation. The project aspires to launch a galactic civilization by harnessing “all of the energy on a planet,” echoing Musk’s sci-fi dreams .
Terafab’s website ties the factory to Musk’s longer-term vision of AI infrastructure. According to the site , the project is intended to produce AI chips at scale, supporting a vision that includes as many as 1 million Tesla Optimus robots, 10 million tons of mass launched into orbit annually , and more than 1 terawatt of solar power.
SpaceX went public in June, raising $75 billion by selling 555.56 million shares at $135 apiece. While the company had an initial valuation of about $1.77 trillion at the time, the public markets have already forced investors to confront the costs behind Musk’s ambitions. SpaceX reported a $541 million loss in its first quarterly earnings report as a public company, despite generating $7.8 billion in revenue. The $16.8 billion announced for Terafab is only the initial investment.
Musk hopes to use taxpayer dollars to offset some of the costs associated with building the largest single property in the world. The project has filed eight tax incentive applications with the two local school districts, asking to freeze school maintenance and operations property taxes at roughly 48% of appraised value for 10 years per phase. Terafab is asking the state to cover the difference of the maintenance and operations (M&0) and interest and sinking (I&S) taxes using the Texas Jobs, Energy, Technology, and Innovation, or JETI, program.
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The company’s explanation for the tax breaks centered on the cost differential between Texas and “competing jurisdictions,” it wrote in the applications.
“Absent the limitation, the project IRR would fall below the minimum investment threshold, and competing jurisdictions (e.g., Arizona) would present a more favorable after-tax return,” the application read , “in which case the project would likely be relocated outside Texas.”
Texas is embracing the bet
To Abbott, Texas is willing to take the hit. Texas extended SpaceX a $30 million Texas Enterprise Fund grant according to Abbott’s press release. SpaceX is already headquartered in Texas, as well as both Starbase’s launch facility and its manufacturing plant. Terafab is just another testament to Musk’s Texas footprint, Abbott said.
“Texas is where big ideas grow even bigger,” the governor said in the release. He called Terafab a “first-of-its-kind” facility that would accelerate chip production and create thousands of jobs.
The Terafab website compares the planned 100 million square feet with Tesla’s roughly 10-million-square-foot Gigafactory Texas and says the facility is designed around production at “terawatt scale.”
SpaceX and the office of Gov. Abbott both did not immediately respond to a request for comment.
This story was originally featured on Fortune.com
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