SpaceX Proposes World’s Largest AI Chip Factory at Gibbons Creek

By Lance Lowry

Anderson, Texas — SpaceX has filed plans for a multi‑billion‑dollar semiconductor manufacturing complex at the former Gibbons Creek coal plant site in Grimes County, marking one of the most ambitious industrial proposals in Texas history.

From Coal to Compute

The 6,000‑acre property, once home to the Texas Municipal Power Agency’s Gibbons Creek Steam Electric Station, was acquired by Kentucky based Charah Solutions in 2021. The company completed environmental remediation and demolition before selling the site to undisclosed buyers. Now, SpaceX intends to repurpose the land for what it calls the “Terafab Project”, a next‑generation, vertically integrated chip fabrication facility designed to produce advanced computing hardware for artificial intelligence systems.

According to filings with Grimes County, the project’s initial phase carries an estimated $55 billion investment, with total capital expenditures potentially reaching $119 billion if all phases are built. The facility would target 1 terawatt of annual compute capacity, positioning Texas as a global leader in semiconductor production and AI infrastructure.

A public hearing on the proposed tax abatement agreement is scheduled for June 3, 2026, at 9 AM in the Grimes County Justice & Business Center, located at 270 FM 149 W , Anderson, Texas.

The public notice identifies the project as SpaceX Reinvestment Zone No. 1 – 2026‑001, encompassing the Gibbons Creek Reservoir and surrounding areas. Grimes County commissioners will consider incentives for the development, which SpaceX describes as a “transformative investment in domestic semiconductor manufacturing capacity.”

In a response to a post on X yesterday, Elon Musk wrote:

“This is one of several locations under consideration for what will be the largest and most advanced chip fabrication facility in the world.”

Regional and Economic Context

The proposed site sits roughly midway between Huntsville and College Station, near Carlos, Texas, an area already under consideration for the future Interstate 14 project. The project would bring thousands of construction and technical jobs to the region, leveraging existing power transmission lines and water resources from Gibbons Creek Reservoir, once used to generate power.

If approved, the Terafab Project would mark a major milestone in Texas’s transition from fossil‑fuel‑based industries to high‑technology manufacturing, reinforcing the state’s growing role in the global semiconductor supply chain.

The new factory could see Space X signaling less reliance on Nvidia and Taiwan Semiconductor Manufacturing Company (TSMC), as Elon Musk posted on X yesterday “xAI will be dissolved as a separate company, so it will just be SpaceXAl, the Al products from SpaceX.”