Elon Musk’s SpaceX chip fab in Texas to cost up to $119 billion

Elon Musk’s plans to build a massive chip manufacturing facility in East Texas will cost at least $55 billion for the first phase and up to $119 billion if the entire structure comes to fruition.

Estimated capital investment amounts were disclosed in a report. notice of public hearing Wednesday in Grimes County, Texas, home of the possible facility. The notice stated that SpaceX, controlled by Musk, was seeking a property tax abatement agreement from the state.

Grimes County will hold a public hearing on June 3 to consider proposed tax cuts.

Musk, who is also CEO Tesla’sIt aims for Terafab to be “the most epic chip creation effort ever, combining logic, memory and advanced packaging under one roof.” Publish on X Last month from SpaceX, which now owns artificial intelligence company xAI. Musk officially launched the project in March.

The chip complex outside Austin will be designed to produce chips for SpaceX, xAI and Tesla and will be built jointly by those companies. Musk said: Publish on X He said xAI “will be dissolved as a separate company” and be called SpaceXAI.

in April, Intel It announced that it would join the Terafab project to help “design, manufacture and package ultra-high-performance chips at scale.” This is the first major external commitment to the capital-intensive foundry portion of Intel, which has until now produced chips exclusively for its own products.

During Tesla’s first-quarter earnings call last month, Musk said Tesla plans to use Intel’s upcoming 14A process to produce chips at the facility. Intel’s shares soared on this news and had its best month ever in April; Its value has more than doubled.

Intel positioned to benefit from ongoing AI boom as manufacturing capacity becomes harder to come by Taiwan Semiconductor ManufacturingIt’s where giants like Nvidia and Apple reserve chip production opportunities for years to come.

Ben Bajarin, a chip analyst at Creative Strategies, said Musk launched a “15-year strategy” and knew he needed to control his companies’ supply chain because “it would be very, very difficult for them to have any primacy at TSMC.”

“You don’t wake up one day and say, ‘I’m going to be a foundry,'” Bajarin said. “This is a very mature process with general constraints on how these things are done.”

During a Tesla earnings call in January, Musk said major chip suppliers probably wouldn’t be able to produce enough hardware to meet the automaker’s needs, and that building a Terafab “will actually be very important to make sure we’re protected against any geopolitical risk as well.”

In its just earnings call, Musk said that Tesla was “still working on the details of the Terafab installation” and that the company would build a research factory at its factory in Austin, costing about $3 billion and “capable of producing perhaps a few thousand wafers per month.”

“SpaceX will handle the first phase of the scaled-up Terafab,” Musk said in the call.

SpaceX’s financial statements are coming to light ahead of the IPO planned to be held in the coming months. The company filed confidentially for an IPO in April, weeks after merging with xAI, valuing the combined entity at $1.75 trillion.

Tesla and SpaceX did not immediately respond to a request for comment.

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