Governor Greg Abbott pitched Texas as a home for big ideas, highlighting state support for the project.

The $16.8 billion initial phase is smaller than Musk’s initial $25 billion figure, and SpaceX’s S-1 filings referred to Terafab as a general framework with no binding commitments, indicating ongoing uncertainty about final scale, IP splits, and funding.

Terafab will be a 100-million-square-foot, vertically integrated facility that designs, manufactures, packages, and tests advanced logic and memory chips under one roof.

The project is designed to bridge global chip supply with growing compute demand, producing chips for edge computing and AI inference for uses such as Tesla’s Optimus robots, self-driving Cybercabs, SpaceX space-based data centers, and related manufacturing and testing operations on site to enable rapid iteration.

SpaceX and Tesla plan to invest an initial $16.8 billion to build Terafab, a large AI semiconductor complex in Grimes County, Texas, aimed at securing chip capacity for future needs.

The announcement came after a crowded county meeting where residents raised concerns over tax breaks and transparency, signaling ongoing local scrutiny.

Insider activity shows mixed sentiment, with net selling of about $2.4 million over three months, while some gurus have added to holdings and others trimmed positions.

Initial filings outlined a broader plan with a May filing showing total potential investment up to $119 billion if additional phases are completed.

The first phase targets $16.8 billion in capital, with total costs across all phases potentially surpassing $119 billion.

Earlier plans indicated a higher potential total investment of up to $119 billion if expanded phases come online, underscoring ongoing uncertainty about final scale and funding.

Industry-wide caution about the high costs of AI infrastructure accompanies the project, amid broader mega-cap tech sell-offs investing in AI.

Tesla’s trailing price-earnings ratio sits well above its five-year median, signaling potential overvaluation relative to earnings.