SpaceX may spend up to $119B on ‘Terafab’ chip factory in Texas

Source: TechCrunch

In Brief

Image Credits: Alisha Jucevic/Bloomberg / Getty Images

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 the total spend could reach $119 billion, describing the project as a “multi‑phase, next‑generation, vertically integrated semiconductor manufacturing and advanced computing fabrication facility.”

Project Background

• Musk previously outlined plans for the project, dubbed “Terafab,” which will also involve Tesla resources.
• Chip‑making giant Intel has been brought into the effort, as reported earlier this year. The partnership aims to develop chips for:
  • AI servers
  • Satellites
  • SpaceX’s proposed data center in space
  • Autonomous Tesla vehicles and robots

Musk’s Vision

Musk has said the facility will eventually produce enough chips to generate 1 terawatt of power per year, arguing that current semiconductor manufacturers aren’t keeping pace with his companies’ AI 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.

He later clarified that Grimes County, Texas, is only one of several locations under consideration for the factory, per a tweet on Tuesday.

Strategic Context

• The filing coincides with Musk’s push to ensure xAI has sufficient compute power for training and running its Grok series of AI models.
• Musk is also pursuing space‑based data centers, a key rationale for integrating xAI with SpaceX.
• The combined SpaceX‑xAI entity is reported to have a valuation of $1.25 trillion and is expected to go public in June, according to a recent report.