SpaceX secured a property tax abatement from Grimes County, Texas, on Wednesday for its proposed Terafab chip manufacturing facility. This comes in spite of opposition from residents, over concerns about environmental damage, strained resources, and a lack of transparency from the company.
The Terafab project is an ambitious plan to construct a series of large semiconductor “fabs” or fabrication plants to produce chips for robotaxis, humanoid robots, and solar-powered data centers in space. It is central to SpaceX’s efforts to branch out from its focus on rockets and satellites into advanced computing infrastructure, and domestic chip productions.
A reinvestment zone designation and a 100% property tax abatement, both cleared the Grimes County Commissioners Court by a 4-1 margin, covering a project worth $55 billion. SpaceX agreed that instead of paying property taxes, it would hand Grimes County a $10 million lump sum at the outset, followed by annual payments of $20 million stretched across a 35-year term.
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The only dissenting vote was cast by Grimes County Commissioner David Tullos.
The public hearing drew a massive crowd, with over 100 attendees. Among those who addressed the court, critics of the move outnumbered supporters by far. “This agreement is a disappointment, we could have achieved so much more,” Tullos said. “This hasn’t felt like a negotiation, it’s felt like a capitulation.”
SpaceX, told the court the company was committed to addressing infrastructure and environmental concerns. He said that the facility would draw water from the Gibbons Creek Reservoir instead of tapping county groundwater, bring its own fire and emergency medical teams on-site, and generate roughly 1,800 jobs.
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Meanwhile, Marie Egyed, representing the resident advocacy group Grimes County Citizens for Responsible Development, told commissioners the way the project had been handled would invite “distrust, backlash and possible future litigation,” according to a report by the Financial Times.
The planned facility is to be located near the former Gibbons Creek Steam Electric Station, a shuttered coal plan. According to The Quartz, total investment in Terafab — which is a collaboration between SpaceX and Tesla — could reach $119 billion across multiple phases.
Chips produced there would supply Tesla’s autonomous driving and robotics programs as well as SpaceX’s Starlink satellites and planned orbital data centers.
This comes a week ahead of SpaceX’s planned IPO, which could potentially be the biggest IPO in history at an expected valuation of $1.75 trillion. However, investment firm Morningstar has valued SpaceX at approximately $780 billion, far below the valuation the company is targeting.