Elon Musk’s vision for a massive semiconductor fabrication facility in East Texas is projected to require a minimum of $55 billion for the initial stage, with the total investment potentially reaching $119 billion if the entire project is completed.
These projected capital figures were revealed in a public hearing announcement issued Wednesday in Grimes County, Texas, the site of the planned facility. The document indicates that SpaceX, which is led by Musk, is requesting a property tax reduction agreement from the county.
Grimes County is scheduled to host a public hearing on June 3 to review the proposed tax incentives.
Musk, who also serves as Tesla’s CEO, has described Terafab as the «most ambitious chip manufacturing undertaking ever — integrating logic, memory, and advanced packaging under one roof,» according to a recent post on X by SpaceX, which now owns the artificial intelligence firm xAI. Musk formally initiated the project in March.
The semiconductor complex near Austin will be constructed to produce chips for SpaceX, xAI, and Tesla, with all three companies collaborating on the build. Musk announced on X that xAI «will be dissolved as a separate company» and will operate under the name SpaceXAI.
In April, Intel announced its participation in the Terafab initiative to assist in «designing, fabricating, and packaging ultra-high-performance chips at scale.» This marks Intel’s first significant external commitment for its foundry operations, which have previously only produced chips for its own products.
During Tesla’s first-quarter earnings call last month, Musk stated that Tesla intends to utilize Intel’s upcoming 14A process at the facility. Following the announcement, Intel’s stock surged and recorded its strongest April performance on record, more than doubling in value.
Intel stands to gain from the ongoing AI expansion, as manufacturing capacity is becoming increasingly scarce at Taiwan Semiconductor Manufacturing Company (TSMC), where major firms like Nvidia and Apple have secured chipmaking capacity for years.
Ben Bajarin, a semiconductor analyst at Creative Strategies, noted that Musk is pursuing a «15-year strategy,» recognizing that his companies must control the supply chain since «it would be extremely difficult for them to secure priority at TSMC.»
«You don’t simply decide one day to become a foundry,» Bajarin explained. «It’s a highly mature industry with widespread constraints on how these chips are produced.»
During a Tesla earnings call in January, Musk mentioned that key chip suppliers were unable to produce sufficient hardware to meet the automaker’s demands, and that constructing a Terafab was «crucial to protect against geopolitical risks.»
In a more recent earnings call, Musk indicated that Tesla was «still finalizing the details of the Terafab deployment» and that the company would construct a research fabrication facility at its Austin plant, costing approximately $3 billion and «capable of producing perhaps a few thousand wafers per month.»
«SpaceX will handle the initial phase of the scaled-up Terafab,» Musk stated during the call.
SpaceX’s financial details have recently emerged ahead of a planned public offering in the coming months. The company filed confidentially for an IPO in April, weeks after a merger with xAI valued the combined entity at $1.75 trillion.
Tesla and SpaceX did not immediately respond to requests for comment.
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