Elon Musk arrives at a federal courthouse during court proceedings in a lawsuit against OpenAI on April 30, 2026 in Oakland, California.
Josh Edelson | AFP | Getty Images
Elon Musk’s plan to build a giant semiconductor manufacturing facility in East Texas will cost at least $55 billion in the first phase and up to $119 billion once fully built.
The estimated capital investment was disclosed in a public hearing notice Wednesday in Grimes County, Texas, where the proposed facility is based. The notice says Musk’s company SpaceX is seeking a property tax abatement agreement from the county.
Grimes County will hold a public hearing on June 3 to consider the tax reduction proposal.
Mr. Musk, who is also the CEO, teslaSpaceX, which now owns artificial intelligence company xAI, said in a post on X last month that the company aims for Terafab to be its “grandest chip-building effort to date, combining logic, memory, and advanced packaging under one roof.” Musk officially launched the project in March.
The chip complex outside Austin is designed to make chips for SpaceX, xAI and Tesla, and will be built jointly by the companies. In a post about X, Musk said that xAI will be “dissolved as a separate company” and will be called SpaceXAI.
In April, intel The company announced it will join the Terafab project to help “design, manufacture, and package ultra-high-performance chips at scale.” This is the first major outside involvement for the capital-intensive foundry side of Intel’s business, which until now has only made chips 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 its facilities. Intel’s stock price soared on the news, more than doubling in value in April, making it the company’s best month on record.
With manufacturing capacity hard to come by, Intel stands to benefit from the ongoing AI boom. taiwan semiconductor manufacturingThere, giants like Nvidia and Apple have reserved chip manufacturing availability for years to come.
Ben Bajarin, a chip analyst at Creative Strategies, said Musk is embarking on a “15-year strategy” knowing his company needs to control its supply chain because “it’s very difficult to have priority at TSMC.”
“You don’t wake up one day and say, ‘I’m going to become a foundry,'” Bajarin said. “This is a very mature process, and there are constraints across the board on how these things are manufactured.”
Musk said on Tesla’s earnings call in January that major chip suppliers can’t produce enough hardware to meet the automaker’s needs, and that building a Terrafab “is actually going to be very important to make sure we’re protected from geopolitical risks.”
Musk said on a recent earnings call that Tesla is “still working out the details of deploying a terra fab” and plans to build a roughly $3 billion research facility at its Austin factory “that can probably produce a few thousand wafers a month.”
“SpaceX will be responsible for the early stages of scaled-up terra fabs,” Musk said on a conference call.
SpaceX’s financials are being revealed ahead of a planned initial public offering in the coming months. The company secretly filed for an IPO in April, weeks after its merger with xAI valued the combined company at $1.75 trillion.
Tesla and SpaceX did not respond to requests for comment.
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