SpaceX reportedly plans massive $119B Terafab chip factory project in Texas

SpaceX, Elon Musk’s aerospace company that also houses the artificial intelligence venture xAI, is reportedly planning to build a massive semiconductor manufacturing facility in Texas that could eventually cost as much as $119 billion. According to a proposal published on the Grimes County, Texas, website, the company is considering an initial investment of approximately $55 billion for the project. The filing describes the development as a “multi-phase, next-generation, vertically integrated semiconductor manufacturing and advanced computing fabrication facility.”

The proposed project, known as “Terafab,” has previously been discussed publicly by Musk, who has outlined ambitions to dramatically increase chip production capacity to support the growing needs of his companies. Tesla is also expected to contribute resources to the initiative, while semiconductor giant Intel has reportedly been brought in as a partner.

The facility would reportedly focus on manufacturing chips for AI servers, satellites, SpaceX’s proposed space-based data centres, and Tesla’s autonomous driving systems and robotics programs.

Musk has repeatedly emphasised the importance of securing chip supply for future AI and robotics development. He previously stated that the factory could eventually manufacture enough chips to generate one terawatt of power per year, arguing that existing semiconductor manufacturers cannot scale production quickly enough to meet the demands of advanced artificial intelligence systems. “We either build the Terafab, or we don’t have the chips, and we need the chips, so we build the Terafab,” Musk wrote in a recent post on X.

However, Musk clarified on Tuesday that Grimes County is only one of several locations currently under evaluation for the project, suggesting that no final decision has been made yet.

The proposal comes as Musk continues expanding xAI’s infrastructure ambitions. The billionaire has been aggressively investing in computing power to train and support xAI’s Grok family of AI models. He has also discussed plans to build data centres in space, describing orbital computing infrastructure as a key strategic driver of the closer integration between xAI and SpaceX.

Reports suggest the combined SpaceX and xAI entity could now be valued at roughly $1.25 trillion, with expectations that the merged business may eventually pursue a public listing as early as June.