SpaceX Files for $119B Texas Chip Factory to Meet AI and Space Computing Demands

Quick Facts

• SpaceX filed for Terafab chip factory in Texas with $55B initial phase, potentially reaching $119B total investment
• Facility targets 2-nanometer chips with 100,000 wafer starts per month by mid-2028 at earliest
• Intel joins as manufacturing partner for joint venture between SpaceX, Tesla, and xAI

SpaceX filed plans for a massive semiconductor manufacturing facility in Texas called Terafab, with an initial investment of $55 billion that could scale to $119 billion for the complete buildout. The proposal was disclosed in a public hearing notice Wednesday in Grimes County, Texas.

The $55 billion initial phase alone would exceed the $52.7 billion Congress authorized through the CHIPS Act for the entire U.S. semiconductor industry. Grimes County will hold a public hearing June 3 to consider proposed tax breaks for the project.

The facility will be located near Gibbons Creek Reservoir, about 20 miles east of Bryan-College Station. Terafab proposes a 100-million-square-foot campus housing design, lithography, fabrication, memory integration, and advanced packaging operations.

The project targets 2-nanometer process technology with initial output of 100,000 wafer starts per month. Elon Musk stated the goal is producing more than a terawatt of AI computing power annually, with most capacity destined for space applications.

“We either build the Terafab or we don’t have the chips, and we need the chips, so we build the Terafab,” Musk said. He called it “the most epic chip-building exercise in history by far.”

Intel joined the project in April 2026 as strategic manufacturing partner. CEO Lip-Bu Tan characterized the effort as “a step change in how silicon logic, memory, and packaging will get built in the future.”

Terafab operates as a joint venture between SpaceX, Tesla, and xAI, which SpaceX acquired in February 2026 for $1.25 trillion. The companies aim to develop chips for AI servers, satellites, space data centers, autonomous vehicles, and humanoid robots.

Morgan Stanley projects initial chip output would not occur until mid-2028 at earliest under aggressive buildout scenarios. The analyst firm estimates Tesla’s Giga Texas facility alone will require 20 million chips annually for 10 million humanoid robots, roughly six times Tesla’s current automotive chip demand.

Musk claims current global chip production meets only 2% of Tesla and SpaceX needs across all projects. The global semiconductor industry expects record $975 billion sales in 2026, driven by AI demand, according to Deloitte.

SpaceX filed confidentially for an IPO in April, targeting June launch with potential $1.75 trillion valuation. The company highlighted supply chain risks, noting it lacks long-term contracts with many chip suppliers and continues relying on third parties.

Read more: SpaceX may spend up to $119B on ‘Terafab’ chip factory in Texas