SpaceX proposes $55 billion Terafab chip factory in Texas to fuel AI and space ambitions

SpaceX may spend up to $119 billion on 'Terafab' chip factory in Texas | TechCrunch

SpaceX, Elon Musk's space company that also houses his AI company, xAI, is considering spending $55 billion, at least initially, to build a semiconductor factory in Grimes County, Texas, according to a proposal on the county website. The company estimates it may spend a total of $119 billion on the project, which would be a "multi-phase, next-generation, vertically integrated semiconductor manufacturing and advanced computing fabrication facility," according to the filing. Musk has previously outlined plans for the project, dubbed "Terafab," that will also see Tesla contributing resources. The companies have roped chipmaking giant Intel into the effort, aiming to develop chips for AI servers, satellites, SpaceX's proposed data center in space, as well as autonomous Tesla vehicles and robots. The billionaire has said the manufacturing facility will, sometime in the future, manufacture enough chips to provide 1 Terawatt of power per year, arguing that semiconductor manufacturers aren't making chips quickly enough for his companies' artificial intelligence and robotics needs. "We either build the Terafab or we don't have the chips, and we need the chips, so we build the Terafab," he wrote. However, Musk wrote in a tweet on Wednesday that Grimes County in Texas was only one of several locations under consideration for the factory. The filing comes as Musk has doubled down on ensuring xAI has enough computing power available to train and power its Grok series of AI models. He's also intent on capitalizing on the demand for AI compute by building data centers in space, which he has cited as a big reason for combining xAI with SpaceX. The combined entity is said to have a valuation of $1.25 trillion and is expected to go public in June.

SpaceX has a $55 billion plan to build AI chips in Texas

Elon Musk's plans to get into the AI chip manufacturing business are going to be costly. As the New York Times and CNBC report, SpaceX is planning to invest at least $55 billion into its "Terafab" chip plant in Austin, Texas. That's according to the details of a public hearing notice filed in Grimes County, Texas, for a meeting to request tax breaks for the project. The company says that if additional phases are constructed, its investment could someday balloon to $119 billion total. When Musk initially announced the project in March, he shared ambitious plans for it to produce enough chips to support up to 200 gigawatts per year of computing power on Earth, and up to one terawatt in space. SpaceX is also trying to expand its data center footprint on Earth, and currently operates a "Colossus" data center in Memphis, Tennessee, that recently signed an agreement to power Anthropic's AI models. The Texas plant will be run by SpaceX and Tesla and make chips for both companies, which Musk has said will be used for AI, robotics, and space-based data centers. Last month, Intel announced that it would help design and build Terafab, saying, "Our ability to design, fabricate, and package ultra-high-performance chips at scale will help accelerate Terafab's aim to produce 1 TW/year of compute to power future advances in AI and robotics."

Musk has never built a wafer fab, but he wants to burn $119B on one anyway

Elon Musk's SpaceX hopes to plow as much as $119 billion into the southeast Texas countryside to build a massive semiconductor fab to produce chips for orbital AI datacenters. We won't hold our breath. The harebrained scheme is part of Elon Musk's recently announced Terafab project, which seeks to boost global semiconductor production by 50x. After all, how else is he supposed to lob a terawatt of compute a year into orbit? In a recent public filing, SpaceX described the project as a "multi-phase, next-generation, vertically integrated semiconductor manufacturing and advanced computing fabrication facility." The facility would be located roughly 80 miles northeast of Houston near the Gibbons Creek Reservoir. The first phase of this project is expected to cost around $55 billion, or about 1.25 Twitters. For reference, Intel's leading-edge fab expansion in Chandler, Arizona cost roughly $30 billion, but that facility pales in comparison to Musk's ambitions. In addition to silicon used for compute, Musk claims Terafab will have all the equipment necessary to produce chips of any kind, and that includes memory. "In a single building, we can create a lithography mask, make the chip, test the chip, make another mask, and have an incredibly fast recursive loop for improving the chip design," Musk boasted in a March presentation. That's an ambitious plan from a man who has never run a fab before. SpaceX, which now includes Musk's AI startup xAI and by extension the shriveled husk of the once great social network Twitter, knows an awful lot about building launch vehicles, satellites, bit barns, and web-scale applications. But last time we checked, the companies have zero semiconductor manufacturing experience. This knowledge gap doesn't seem to have Musk all that worried, seeing as last month American foundry partner Intel just signed on to help out with the project. During Tesla's most recent earnings call, the CEO revealed his Terafab manufacturing venture would produce chips based on Intel's yet unfinished 14A process node. These chips will include homegrown AI accelerators - an area where Tesla, also part of the Terafab project, does have some experience, unlike chip manufacturing. Tesla has developed several generations of custom silicon to power its electric vehicles, as well as its fully custom Dojo supercomputing platform. So at least that bit is plausible. Of course, demand for these chips is predicated entirely on SpaceX's Starship bringing down the cost to orbit to a level where orbital datacenters are economically viable, which still hasn't happened yet. But seeing as it takes three to five years to bring a new fab online, SpaceX still has time to make its first truly reusable rocket... well, reusable. Musk has a history of making big promises and then not delivering on them. You might remember him promising to cut $2 trillion and then $1 trillion from government spending via DOGE, but only managing to cut about $150 billion or 2.2 percent. He has also predicted that SpaceX would send a rocket to Mars by 2024 and that Tesla would have a million robotaxis on the road by 2020. In the meantime, the Grimes County Court of Commissioners will consider whether to grant Musk's Terafab project a property tax abatement during a meeting at 9 am on June 3. ®

SpaceX files plan for $55 billion Terafab chip facility in Texas

May 6 (Reuters) - Elon Musk's SpaceX has proposed an initial investment of $55 billion to build a semiconductor manufacturing facility, called Terafab, in Texas, according to a filing made public on Wednesday. The facility, a joint project with Tesla (TSLA.O), opens new tab, comes as Musk seeks to secure in-house access to advanced chips, though analysts say the scale of capacity he has outlined would likely require far greater investment. SpaceX ⁠is also targeting a June IPO that could value the company at around $1.75 trillion. Musk has been tightening integration of AI efforts across his companies, with SpaceX acquiring his startup xAI earlier this year in a deal focused on building space-based data centers for artificial intelligence processing. The combined entity was valued at $1.25 trillion. The Terafab project would involve a multi-phase chip fabrication and advanced computing complex aimed at boosting domestic semiconductor production in the United States. SpaceX estimates total investment could rise to $119 billion if additional phases are completed. The facility is planned in Grimes County within a newly designated reinvestment zone, where local officials are expected to consider a property ⁠tax abatement agreement at a June meeting. The proposed facility could help reduce reliance on external suppliers such as Samsung (005930.KS), opens new tab and Taiwan Semiconductor Manufacturing Co (2330.TW), opens new tab. SpaceX flagged plans to "manufacture our own GPUs" as part of "substantial capital expenditures" outlined in its S-1 registration, according to excerpts reviewed by Reuters. The filing also highlighted risks around supply, noting the company lacks long-term contracts ⁠with many direct chip suppliers and will continue to rely significantly on third parties. SpaceX added there is no assurance it will meet its Terafab objectives within expected timelines, or at all. The plan aligns with a broader U.S. push ⁠to expand domestic semiconductor manufacturing amid geopolitical tensions and supply chain risks. Signaling efforts to bring in external manufacturing expertise, Musk said last month in Tesla's first-quarter earnings call that the Terafab will use chipmaker Intel's (INTC.O), opens new tab 14A process to ⁠produce chips. The facility is intended to supply chips for Tesla's self-driving systems, humanoid robots and AI data centers, showcasing the scale of compute demand across Musk's businesses, as he ramps up investment in building end-to-end computing capability. Reporting by Anhata Rooprai and Akash Sriram in Bengaluru; Editing by Anil D'Silva and Devika Syamnath Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Business * ADAS, AV & Safety * Manufacturing * Sustainable & EV Supply Chain

Elon Musk's SpaceX Plans $55 Billion Investment to Make A.I. Chips

The rocket company's new semiconductor factory, called Terafab, is part of the billionaire's increasing efforts to dominate artificial intelligence. The scale of Elon Musk's ambitious plan to build a giant computer chip plant in Texas is becoming clear -- and it is stunning. The first stage of the chip manufacturing project led by his rocket company, SpaceX, will cost at least $55 billion, according to a public hearing notice filed on Wednesday in Grimes County, Texas, where the factory will be located. Total spending could reach $119 billion. The project, called Terafab, is intended to supply chips to power artificial intelligence for SpaceX and Tesla, Mr. Musk's electric car company. SpaceX is also asking for tax breaks for the project, something that will be discussed at a hearing next month, according to the notice. SpaceX is pursuing the chip manufacturing plant as the rocket company prepares to go public as soon as June, in what is likely to be one of the largest initial public offerings ever. Even as SpaceX's main businesses involve rocket launches and offering satellite internet, Mr. Musk has increasingly used the company to push his A.I. ambitions. This year, SpaceX bought xAI, Mr. Musk's A.I. start-up, creating a company with a valuation of $1.25 trillion. Last month, SpaceX announced a $60 billion deal to acquire the A.I. start-up Cursor, which makes a code-writing assistant. And Mr. Musk has also pitched the idea of A.I. data centers that would orbit Earth.

Everything to know about Elon Musk's new chip factory for SpaceX

Terafab is being developed by SpaceX, Tesla, and xAI, placing it at the centre of Musk's push to connect artificial intelligence, computing power, and space infrastructure. Elon Musk's plan to build a major chipmaking facility in Texas, in the United States, has taken a clearer shape after SpaceX filed plans for a $55 billion (€46.8 billion) chipmaking facility on Wednesday. Musk announced the Terafab project in March to produce more than one terawatt of artificial intelligence (AI) compute capacity per year. At the launch, Musk framed the project as a response to future chip shortages, according to reports at the time. He said he was grateful to existing chip suppliers such as Samsung and TSMC, but said demand from his companies would eventually exceed total global chip output. The project, known as Terafab, would be built in Grimes County, in the US, and would focus on semiconductor manufacturing and advanced computing, two areas that are increasingly central to Musk's artificial intelligence and space ambitions. Local documents describe it as a multi-phase facility for semiconductor manufacturing and advanced computing. Terafab would give Musk more control over the chips and computing power needed across SpaceX, Tesla, and xAI. Tesla has made autonomous driving and robotics central to its strategy, SpaceX operates Starlink and other satellite systems, and xAI is developing large AI models that require significant computing capacity. The project comes as advanced chips have become one of the most important resources in the global technology race. AI systems need specialised semiconductors to train models, process data, and run complex software. Demand for those chips has surged as companies build larger AI systems, while governments in the US and Europe are trying to grow their own semiconductor industries and reduce reliance on supply chains concentrated in East Asia. Terafab would bring those ambitions closer together by linking chipmaking, computing power, artificial intelligence, and space infrastructure. The project is still at an early stage. Local officials in Texas are expected to discuss proposed incentives for the site at a public hearing in early June, and the facility remains subject to approvals, financing, and construction hurdles.