Elon Musk’s SpaceX Announces $55 B “Terafab” AI Chip Plant in Texas

SpaceX filed a public-hearing notice for a semiconductor fab named “Terafab” in Grimes County, Texas. The first phase is budgeted at $55 billion, with a possible total of $119 billion. The plant will produce AI chips for SpaceX, Tesla and Musk’s AI ventures, targeting up to 200 GW of Earth-based compute and one terawatt in orbit.

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Musk’s chip push follows AI moves: SpaceX’s acquisition of xAI, a $60 billion purchase of the code-writing startup Cursor, and the “Colossus 1” data center in Memphis, which powers Anthropic’s models. The project arrives as Nvidia’s valuation soars and rivals such as Google, Amazon and Intel intensify in-house AI silicon efforts. Intel will co-design and fabricate the Terafab chips.

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Musk announced Terafab in March 2024. The public-hearing notice filed in April disclosed the $55 billion first-stage cost. Intel confirmed its partnership in May. SpaceX plans an IPO in June, and a tax-break hearing is set for July.

Seattle Times

The $55 billion first-stage outlay could rise to $119 billion in later phases. Terafab aims to deliver 200 GW of Earth-based compute and one terawatt of orbital capacity, about 1 TW/year. SpaceX already runs the Colossus 1 data center with 220,000 Nvidia AI chips. A modern fab typically takes three to five years.

The Verge

Terafab could boost U.S. semiconductor capacity, creating a source of AI-grade chips and lowering dependence on foreign fabs. By combining logic, memory and advanced packaging under one roof, the plant may pressure rivals such as Nvidia and Intel to accelerate their roadmaps. The facility also supports Musk’s vision for AI-enabled robotics, autonomous vehicles and space-based data centers.

The Verge

SpaceX’s filing called the project a transformative investment in domestic semiconductor manufacturing. Intel said its expertise will accelerate Terafab’s goal of producing one terawatt of compute per year for AI and robotics. Musk has described the effort as the most epic chip-building initiative to date. The company seeks tax incentives, with a July hearing scheduled.

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

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• “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.” — Intel spokesperson

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• “a transformative investment in domestic semiconductor manufacturing capacity.” — SpaceX filing

Seattle Times

The July tax-incentive hearing will decide state support. If approved, construction could begin later in 2024, with first production lines operational within three to five years. Later phases may raise total spending toward $119 billion, expanding chip output for SpaceX’s AI, robotics and space-based computing plans.

The Verge