The Terafab facility, a joint project with Tesla, could require up to $119 billion in total investment if all phases are completed
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SpaceX has proposed spending $55 billion to begin construction of a semiconductor manufacturing facility in Grimes County, Texas, according to a public notice posted on the county's website. Total investment in the joint venture between SpaceX and Tesla $TSLA — branded Terafab — could climb to $119 billion depending on how many additional phases are ultimately constructed.
The facility is planned near the Gibbons Creek Reservoir within a newly designated reinvestment zone. Local officials are scheduled to consider a property tax abatement agreement for the project at a June 3 public hearing.
According to filings, the project envisions a fabrication complex spanning multiple phases and built on a fully integrated model encompassing both semiconductor manufacturing and advanced computing. Chips produced at the facility would feed into a range of Musk's ventures, including Tesla's autonomous driving programs, its humanoid robotics work, and AI data center infrastructure, Reuters reported. Musk has projected that the plant could eventually handle a terawatt of computing output annually, a scale he envisions as his AI and robotics investments continue to grow.
The Terafab concept was introduced by Musk in March, framed as a necessary step toward securing chip production for his network of AI, robotics, and space ventures. "We either build the Terafab or we don't have the chips, and we need the chips, so we build the Terafab," he said, according to Bloomberg.
Excerpts from SpaceX's confidential S-1 reviewed by Reuters showed the company disclosing intentions to produce its own GPUs, with the document pointing to significant planned capital outflows to support that effort. On the risk side, the S-1 acknowledged that SpaceX has not secured durable agreements with most of its chip suppliers, leaving it heavily dependent on outside vendors, and warned that Terafab's goals might not be achieved on schedule — or at all. During Tesla's most recent quarterly earnings call, Musk indicated that Intel $INTC's 14A process would serve as the manufacturing backbone for chip production at Terafab.
Behind the project is a strategic desire to lessen SpaceX's exposure to outside chipmakers, a list that currently includes Samsung and Taiwan Semiconductor Manufacturing Co. SpaceX's representatives did not respond to requests for comment.
SpaceX is also targeting a late June IPO that could value the company at roughly $1.75 trillion, a figure complicated by the company's merger with Musk's AI startup xAI earlier this year. That deal combined SpaceX's rocket operations, Starlink broadband network, X $TWTR social media platform, and Grok AI chatbot into a single entity. SpaceX reported a $4.94 billion loss on $18.67 billion in revenue last year, a reversal from a $791 million profit on $14.02 billion in revenue in 2024, driven by heavy spending on AI infrastructure following the xAI merger.
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