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

SpaceX, Elon Musk’s space company that also includes his artificial intelligence 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’s website.

The company estimates it could spend a total of $119 billion on the project, which will be a “multi-phase, next-generation, vertically integrated semiconductor and advanced computing manufacturing facility,” according to the filing.

Musk has previously outlined plans for the project, dubbed ‘Terafab’, which will also see Tesla contributing resources. The companies have enlisted chipmaking giant Intel in the effort, aiming to develop chips for AI servers, satellites and SpaceX’s proposed data center in space, as well as Tesla’s self-driving vehicles and robotics.

The billionaire said the manufacturing facility will, at some point in the future, manufacture enough chips to provide 1 terawatt of power annually, arguing that semiconductor manufacturers are not making chips fast enough to meet his companies’ artificial intelligence and robotics needs. “We either build Terrafab or we don’t have the chips, and we need the chips, so we build Terrafab,” he wrote.

However, Musk wrote in a tweet on Tuesday that Grimes County, Texas, was only one of several locations under consideration for the factory.

The filing comes as Musk doubles his efforts to ensure xAI has enough computing power available to train and run the Grok series of AI models. He’s also intent on capitalizing on demand for AI computing by building data centers in space, which he cited as a big reason for integrating augmented AI with SpaceX. The combined entity is said to be worth $1.25 trillion, and is expected to go public in June.