Jun 6, 2026
SpaceX’s looming debut on the Nasdaq marketplace might be center stage right now, but the rocket/AI company is continuing operations as that IPO draws near — and not all of its actions are winning it fans.
SpaceX has worked out a deal with officials in Grimes County, Texas to completely forego paying property taxes on its $55 billion Terafab semiconductor chip manufacturing facility. Instead, the company will pay a $10 million lump sum to the county, followed by $20 million for the next 35 years.
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Commissioners voted four-to-one in approving the deal on June 4, despite complaints from the community that the approval process lacked sufficient transparency and could strain critical infrastructure in the county.
An ambitious goal
Terafab, Elon Musk has said, will eventually create a terawatt of computing power each year. The company is expected to make two kinds of chips — one of which would be used for Tesla vehicles and Optimus robots, while the other was designed to be used in space, as part of Musk’s plans for space-based data centers.
The facility has been met with skepticism, as none of Musk’s companies have semiconductor manufacturing experience. Tesla, at one point, did have a chip design team, but most left the company after Musk killed the Dojo project, which was working on Tesla’s custom-built supercomputer. (And even if they had stayed, chip design is a much different job than chip manufacturing.)
Musk’s own comments about the process have also fueled doubt. In January, he said the semiconductor industry is “getting clean rooms wrong,” betting Tesla would build a 2nm fab where he can “eat a cheeseburger and smoke a cigar.”
Intel joined forces with SpaceX in April to help build out the facility.
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Environmental concerns
The Terafab facility will be built at the Gibbons Creek Reservoir site, roughly 90 miles northeast of Austin, Texas. The $55 billion price tag is nearly triple the $20 billion Musk said it would cost when he announced the project in March.
Some residents of Grimes County have expressed concerns about the project, particularly the potential strain it will put on the local water and power infrastructure. More than 100 people showed up for a local hearing, where some argued that with the company having an expected valuation of $1.75 trillion following its IPO, a 100% waiver on property taxes was inappropriate.
The speed at which the tax abatement was approved also raised eyebrows. SpaceX only applied for it in May, but all proposals passed very quickly.
Commissioner David Tullos, who cast the sole no vote in the approval meeting, questioned SpaceX’s plans for portions of the land in a proposed reinvestment zone.
That question was not answered directly, but John Federspiel, senior director of Starlink Product Engineering at SpaceX, said “We recognize that large projects bring legitimate questions about infrastructure and environmental stewardship. Our company is committed to proactively addressing those concerns and taking care of them responsibly.”
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Chris Morris is a veteran journalist with more than 35 years of experience at many of the internet's biggest news outlets. In addition to his activities as a writer, reporter and editor, Chris is also a frequent panel moderator and speaker at major conferences, including CES and South by Southwest.
