Elon Musk’s ambitious plan to build a massive chip-manufacturing complex in East Texas comes with a staggering price tag: at least $55 billion for the first phase, and up to $119 billion if fully built out. The figures emerged Wednesday in a public hearing notice filed in Grimes County, where SpaceX—the Musk-controlled company behind the project—is seeking a property tax abatement agreement. A public hearing is set for June 3.
Musk has described the facility, dubbed Terafab, as “the most epic chip-building effort ever,” combining logic, memory, and advanced packaging under one roof. The plant, located outside Austin, would produce chips for SpaceX, Tesla, and xAI—the AI startup Musk acquired last month. On X, Musk stated that xAI “will be dissolved as a separate company” and folded into SpaceX, though he did not specify a rebranding to SpaceXAI. In April, Intel announced it would join the project to help design, fabricate, and package high-performance chips at scale—a significant external commitment for Intel’s foundry business, which has historically only made chips for its own products.
During Tesla’s first-quarter earnings call, Musk said the automaker plans to use Intel’s forthcoming 14A process at the facility. Intel’s stock more than doubled in April, its best month ever. The chipmaker stands to gain as AI demand strains capacity at Taiwan Semiconductor Manufacturing Co., where Nvidia and Apple have locked up production for years. “You don’t just wake up one day and say, ‘I’m going to be a foundry,’” said Ben Bajarin, an analyst at Creative Strategies. “It’s a very mature process with constraints across the board.” He called Musk’s move a “15-year strategy” to secure supply chain control, noting that Musk’s companies would struggle to get priority at TSMC.
Musk has cited geopolitical risks and supplier shortages as motivations. On a January earnings call, he warned that key chip suppliers couldn’t meet Tesla’s needs. On the more recent call, he said Tesla is “still working out the details of the Terafab deployment” and plans a $3 billion research fab at its Austin factory. “SpaceX is going to take care of the initial phase of the scaled up Terafab,” he added. SpaceX filed confidentially for an IPO in April, weeks after merging with xAI in a deal that valued the combined entity at $1.75 trillion. Tesla and SpaceX did not respond to requests for comment.
Source: CNBC