The scope of Elon Musk’s ambitious plan to build a giant computer chip factory in Texas is becoming clear — and it’s staggering.
The first phase of the chip-making project, led by his rocket company SpaceX, is estimated to cost at least $55 billion. notice of public hearing filed Wednesday in Grimes County, Texas, where the plant will be located. Total spending could reach $119 billion.
The project, called Terafab, is to supply chips to power artificial intelligence for SpaceX and Tesla, Mr Musk’s electric car company. SpaceX is also seeking tax credits for the project, which will be discussed at a hearing next month, according to the announcement.
SpaceX is eyeing the chip factory as the rocket company prepares to go public as early as June in what is likely to be one of the largest initial public offerings ever.
Although SpaceX’s core business involves launching rockets and offering satellite internet, Mr Musk is increasingly using the company to advance his AI ambitions. This year, SpaceX bought xAI, its AI startup, creating a $1.25 trillion company.
Last month, SpaceX announced a $60 billion deal to buy AI startup Cursor, which creates an assistant for writing code. And Mr Musk also floated the idea of AI data centers orbiting the Earth.
The Terafab venture comes amid a broader race to produce enough chips to power the fast-growing technology. AI chipmaker Nvidia’s valuation has skyrocketed to become the world’s most valuable company. Google, Amazon and others are racing to make their own AI chips.
Musk’s project could also prove key for Intel, a major US chip maker that has struggled in recent years. Last month, Intel announced it would join the Terafab project, which aims to “design, manufacture and package extremely high-performance chips at scale.”
Mr. Musk’s AI efforts are starting to gain momentum. AI startup Anthropic said Wednesday it has struck a deal with SpaceX to use all of the computing power from the rocket company’s Colossus 1 data center in Memphis and its more than 220,000 Nvidia AI chips.
The world’s richest man is also embroiled in a contentious court battle with OpenAI, which Mr Musk co-founded. Mr Musk sued the AI start-up in 2024 over allegations that the company breached its founding agreement when it took on Microsoft as an investor and began building commercial products.
(The New York Times has sued OpenAI and Microsoft, alleging copyright infringement of news content related to AI systems. Both companies have denied the suit’s claims.)
SpaceX did not immediately respond to a request for comment. Wednesday’s filing called the project “a transformational investment in domestic semiconductor manufacturing capacity.”
Mr. Musk is well known for making big, long-term bets. And its plan for a chip complex in East Texas fits the bill, analysts said.
The cost of building modern chip factories has been rising steadily in recent years. New ones typically cost $10 to $30 billion, some even more. It usually takes three to five years to build a new semiconductor factory and equip it with sophisticated machinery.
Terafab will be “the most epic chip-building effort ever – combining logic, memory and advanced packaging under one roof,” Mr Musk wrote in a post on X last month.
