SpaceX’s Terafab Chip-making Initiative in Texas

SpaceX filed a notice with the Grimes County Commissioners Court proposing a multi-phase semiconductor fab called Terafab. The proposal seeks a property-tax abatement and outlines an initial $55 billion outlay, potentially rising to $119 billion. The vertically integrated plant would produce logic, memory and advanced packaging for SpaceX, Tesla and xAI, with Intel as a partner. A hearing is set for June 3, 2026.

SpaceX Files Plans For $55B Terafab Chip Facility In Southeast Texas

Musk has described global chip-supply constraints as limiting AI models, autonomous vehicles, and space data centers. In March 2026 he announced Terafab as a joint venture of SpaceX, Tesla, and xAI, targeting one terawatt of compute per year. Intel’s April 2026 commitment adds design and fabrication capability, including the forthcoming 14A process node. The project is presented as a response to expected shortages in advanced AI chips.

EuronewsSpaceX files for Texas tax break to begin $55 billion Terafab chip facilitySpaceX and xAI consider up to $119 billion ‘Terafab’ chip factory in Texas with Intel’s helpTechCrunchThe Register UKSpaceX Files Plans For $55B Terafab Chip Facility In Southeast TexasSpaceX, Tesla set to invest $55B in Terafab, but they will need more than moneyThe Independent

Initial capital is $55 billion, with a possible total of $119 billion. The site at Gibbons Creek Reservoir lies about 20 mi east of Bryan-College Station and 90 mi northeast of Austin. Planned size is roughly 100 million sq ft, requiring over 10 GW of power. The goal is one terawatt of compute annually. Ownership includes SpaceX, Tesla, xAI; Intel is a partner.

SpaceX files for $55 billion semiconductor fab in rural Texas for Musk's Terafab — total chipmaking fab investment could reach $119 billion

The filing describes the project as a vertically integrated semiconductor manufacturing and advanced computing fabrication facility. Intel said it will “design, fabricate, and package ultra-high-performance chips at scale.” Musk told investors on Tesla’s Q1 earnings call that the fab will use Intel’s 14A process and stressed that constructing Terafab is essential to secure the chips needed for his companies.

The Register UKSpaceX and xAI consider up to $119 billion ‘Terafab’ chip factory in Texas with Intel’s helpThe IndependentSpaceX, Tesla set to invest $55B in Terafab, but they will need more than moneySpaceX Terafab Chip Facility in Texas Proposes $55 Billion InvestmentEuronewsSpaceX files for Texas tax break to begin $55 billion Terafab chip facilityTechCrunchSpaceX Files Plans For $55B Terafab Chip Facility In Southeast Texas

Analysts at Morgan Stanley and Bernstein say the $55 billion phase-1 estimate exceeds earlier $20 billion projections and may be insufficient for a terawatt-scale operation. They cite risks in securing talent, financing the full $119 billion build-out, and SpaceX’s lack of semiconductor-manufacturing experience. Local residents have expressed frustration over limited communication from county officials and concerns about environmental impacts at the former coal-plant site.

Business Insider

• “We either build the Terafab or we don’t have the chips, and we need the chips, so we build the Terafab,” — Elon Musk, X post

TechCrunch

• “most epic chip-building effort ever — combining logic, memory and advanced packaging under one roof,” — SpaceX, X announcement

CNBC

• “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.” — Independent report quoting filing

The Independent

• “The notice said SpaceX, which is controlled by Musk, is seeking a property tax abatement agreement from the county.” — SpaceX filing

CNBC

The Grimes County Commissioners Court will rule on the tax-abatement request on June 3, 2026. The planned June 2026 IPO of the combined SpaceX-xAI entity could provide additional capital. Subsequent SEC filings and financing agreements will determine whether Terafab proceeds to construction and chip production.

SpaceX and xAI consider up to $119 billion ‘Terafab’ chip factory in Texas with Intel’s help