SpaceX is bringing one of the largest manufacturing investments in Texas history to Grimes County.

Gov. Greg Abbott announced Thursday that the company will build its new Terafab semiconductor manufacturing facility in the county, with the first phase representing a capital investment of more than $16.8 billion and creating 3,000 jobs.

The project will receive a $30 million Texas Enterprise Fund grant and qualifies for incentives under the Texas Jobs, Energy, Technology and Innovation (JETI) program.

Designed as a 100-million-square-foot campus, Terafab will combine logic, memory and advanced chip packaging in a single facility to increase semiconductor production for SpaceX's future technology needs. The company expects to hire engineers, technicians and plant operators.

"Texas is where big ideas grow even bigger," Abbott said. "I congratulate SpaceX on this significant expansion of their investment in our great state. The first-of-its-kind Terafab facility will accelerate chip production in Texas at an unprecedented scale, create thousands of good-paying jobs in Grimes County, and expand economic opportunity for generations of Texans across Southeast Texas and beyond."

For Grimes County officials, the project represents more than a major employer.

County Judge Joe Fauth III called the investment "a generational change" for the county.

"When we can connect a company like SpaceX and the Terafab project to develop an industrial site in Grimes County, that makes all the sense in the world," Fauth said.

SpaceX said it selected Texas because of the state's business climate, workforce, infrastructure and logistics network. The company already has deep roots in the state, operating its headquarters and Starbase launch facility in South Texas, along with its Starlink manufacturing operation in Bastrop.

"The foundations for the most exciting future are being built right here in Texas," SpaceX Founder and CEO Elon Musk said. "In addition to our headquarters in Starbase, Texas, where Starship is being developed and launched, and our Starlink factory in Bastrop, Texas, where our high-speed internet kits are manufactured for millions of Starlink customers all around the world — we're now embarking on the most epic chip-building effort — combining logic, memory, and advanced packaging all under one roof — in Grimes County, Texas."

Musk said the facility will allow the company to manufacture artificial intelligence chips at a scale needed for both terrestrial and space applications.

"The Terafab is bringing cutting-edge manufacturing to America, creating thousands of high-paying jobs in the Lone Star State, and enabling us to produce AI chips at scale for use on Earth and in space," he said.

SpaceX said the project is intended to address what it sees as a widening gap between chip production and future computing demand. In announcing the project, the company described Terafab as "an advanced semiconductor fab that will bridge the divide between current global chip supply and the compute demand of the future."

"The combined SpaceX and Tesla demand for chips is expected to be in excess of 1 terawatt (TW) of compute, which is significantly larger than the current global supply," the company said. "While we are deeply appreciative of our current chip suppliers, and encourage them to expand production whenever possible, this looming gulf between supply and demand is at the core of Terafab's necessity."

Ahead of the announcement, local school districts approved tax incentive agreements tied to the development.

The Iola Independent School District Board of Trustees approved a JETI agreement with TeraFab AI, LLC after reviewing public input and consulting with a school finance expert, according to Superintendent Jeff Dyer. Anderson-Shiro Consolidated Independent School District Superintendent Dr. Sarah Borowicz said the agreement is expected to strengthen the district while creating new opportunities for students.

Greater Brazos Partnership President and CEO Tom Johnson said the region is prepared to provide the workforce and infrastructure needed to support the project.

The Texas Enterprise Fund is a performance-based incentive program administered by the Texas Economic Development and Tourism Office. The JETI program was created after Abbott signed House Bill 5 following the 88th Regular Legislative Session to encourage major investments in jobs, energy and advanced technology.