SpaceX to invest $55 billion in Terafab chip facility in Texas

Elon Musk’s SpaceX has proposed a plan to initially invest $55 billion in the construction of a new semiconductor production facility, known as Terafab, in Texas.

According to the filing made public on Wednesday, the rocket company is planning to develop a next-generation, vertically integrated semiconductor manufacturing and advanced fabrication facility.

If the project passes through all planned phases, the total capital investment is estimated to reach $119 billion.

The Terafab project, unveiled first in March, is designed to manufacture advanced chips and GPUs domestically. These chips will be used to power Tesla’s humanoid robots called Optimus, self-driving hardware, and AI data centers.

“We either build the Terafab or we don’t have the chips, and we need the chips, so we build the Terafab,” he said.

The facility also plans to utilize Intel’s 14A process node, highlighting a close collaboration with Intel for manufacturing purposes.

To safeguard their companies, including SpaceX, Tesla, and xAI from external supply shocks, Musk is also eyeing to tighten vertical integration. This move also aligns Musk’s strategy with broader US policy to boost domestic chipmaking and protect it from geopolitical turbulence.

Elon Musk envisions the project eventually supporting a terawatt of annual computing power, reflecting the massive scale required for his intensifying investments in AI and robotics.

SpaceX is also targeting an Initial Public Offering in June that could put the company’s valuation at $1.75 trillion.

Earlier this year, SpaceX acquired Musk’s AI startup, xAI, to build space-based data centers for AI processing. The combined entity was valued at $1.25 trillion.