Grimes County, Texas, just handed SpaceX a full property tax waiver lasting 35 years for a planned $55B semiconductor manufacturing facility called Terafab. The county’s commissioners court approved the deal on a 4-1 vote, greenlit after a public hearing on June 3, 2026, where local residents voiced concerns about environmental impacts and the sheer scale of tax incentives being offered to one of the world’s most valuable private companies.
In exchange for the 100% property tax abatement, SpaceX will pay an upfront fee of $10M and annual payments of $20M over the 35-year term. Quick math: that’s $710M in total payments to the county, which sounds like a lot until you remember the alternative was collecting property taxes on a facility that could eventually represent $119B in total investment.
What Terafab actually is
The facility is a joint effort involving SpaceX, Tesla, and xAI, all companies under Elon Musk’s expanding empire. Terafab is designed to be one of the world’s largest chip fabrication plants, producing advanced AI chips, logic and memory semiconductors, and packaging components.
Tesla needs custom silicon for its autonomous driving systems and humanoid robots. xAI needs compute power for its Grok models. SpaceX has its own chip requirements for satellite communications and spacecraft systems.
