Musk’s Terafab Chip Factory Could Reach $119 Billion
CNBC reported Wednesday that Elon Musk’s Terafab chip factory in Texas carries a price tag of at least $55 billion for its opening phase. The full buildout could ultimately reach $119 billion, according to a public hearing notice filed in Grimes County.
SpaceX Seeks Tax Relief for Ambitious First Phase
The notice was published Wednesday in Grimes County, which sits in East Texas near the site of the proposed facility. SpaceX, the rocket company controlled by Musk, is seeking a property tax abatement from county officials. A public hearing is scheduled for June 3 to consider those potential breaks. SpaceX would lead the initial phase of the scaled facility, with Tesla and xAI jointly participating in the broader buildout.
Intel Signs On as the First Major Outside Partner
The Terafab project gained significant outside backing in April when Intel announced it would help design, fabricate, and package chips at the complex. That partnership marked the first major external commitment for Intel’s foundry business, which had previously only manufactured chips for its own use. Intel shares more than doubled during April, their best monthly performance on record. Tesla CEO Elon Musk said on the company’s first-quarter earnings call that Tesla plans to use Intel’s forthcoming 14A process node at the facility.
Also Read: What Intel’s Foundry Bet Means for the AI Chip Race
Why Musk Wants His Own Chip Supply Chain
The project traces its origins to supply constraints at Taiwan Semiconductor Manufacturing Company, where Apple and Nvidia have locked up capacity years in advance. On an earlier Tesla earnings call, Musk warned that existing chip suppliers could not meet the automaker’s hardware demands. He also cited geopolitical risk as a reason to bring production onshore. Chip analyst Ben Bajarin of Creative Strategies told CNBC that Musk is executing a deliberate “15-year strategy,” recognising that his portfolio of companies would struggle to secure meaningful priority at TSMC. Bajarin cautioned that becoming a foundry is far from straightforward, describing it as “a very mature process with constraints across the board.”
Also Read: TSMC’s Capacity Crunch and the AI Chip Shortage Explained
SpaceX IPO Looms as Costs Come Into Focus
The cost disclosures arrive as SpaceX’s financials face growing public scrutiny. The company filed confidentially for an IPO in April, weeks after its merger with xAI valued the combined entity at $1.75 trillion. A smaller research fab at Tesla’s Austin factory, estimated at roughly $3 billion, is expected to produce a few thousand wafers per month initially. Neither Tesla nor SpaceX responded to requests for comment at the time of publication.
Read Next: Intel’s Arizona Expansion and the Race to Build AI Chips in America
