Elon Musk’s SpaceX has proposed building a massive semiconductor manufacturing facility in Texas with an initial investment of approximately $55 billion, marking one of the largest planned chip infrastructure projects in the United States. The facility, called “Terafab,” is being developed in partnership with Tesla as part of Musk’s broader push to secure in-house access to advanced AI chips and computing infrastructure.
According to public filings, the Terafab project will be a multi-phase semiconductor manufacturing and advanced computing complex aimed at boosting domestic chip production and reducing reliance on external suppliers such as TSMC and Samsung Electronics. SpaceX estimates that the total investment could eventually rise to nearly $119 billion if future expansion phases are completed.
The proposed facility is planned for Grimes County, Texas, within a newly designated reinvestment zone where local officials are expected to consider tax incentives and property tax abatements during upcoming meetings. Reports indicate the project site is near the Gibbons Creek Reservoir and strategically positioned close to major energy and research infrastructure.
The project is intended to manufacture advanced AI chips and GPUs that will support a wide range of Musk-led initiatives, including Tesla’s self-driving systems, humanoid robots, AI data centers, and space-based computing systems. Reuters reported that SpaceX specifically highlighted plans to “manufacture our own GPUs” as part of the company’s long-term strategy to vertically integrate computing capabilities across its businesses.
Musk has also indicated that the Terafab initiative will leverage Intel’s 14A semiconductor process technology, signaling collaboration with external manufacturing expertise while still aiming for greater supply chain independence. Analysts believe the project reflects the growing urgency among major technology firms to secure chip supply amid surging demand for AI infrastructure globally.
The announcement comes as SpaceX prepares for a potential IPO reportedly targeting a valuation of around $1.75 trillion. It also follows deeper integration between Musk’s companies after SpaceX’s acquisition of xAI earlier this year, further aligning AI, robotics, automotive, and space technologies under a unified infrastructure strategy.
Industry observers note that if completed at the proposed scale, Terafab could become one of the world’s largest semiconductor manufacturing facilities and a major milestone in the United States’ efforts to strengthen domestic chip production and AI competitiveness.
