Musk’s Texas chip factory price tag could hit $119 billion, according to public filing

Elon Musk’s ambitious Terafab chip manufacturing complex in East Texas may cost between $55 billion for its first phase and as much as $119 billion if fully built out, according to a public hearing notice filed Wednesday in Grimes County, Texas. The notice, which seeks a property tax abatement agreement from the county, states that SpaceX—the Musk-controlled company spearheading the project—will present the proposal at a public hearing on June 3.

Musk, who also runs Tesla, has described Terafab as “the most epic chip-building effort ever,” combining logic, memory, and advanced packaging under one roof. The facility, located outside Austin, will produce chips for SpaceX, xAI, and Tesla. In a post on X, Musk indicated that xAI will be folded into SpaceX and rebranded as SpaceXAI.

Intel joined the project in April, agreeing to help design, fabricate, and package high-performance chips at scale. During Tesla’s first-quarter earnings call, Musk said Tesla plans to use Intel’s upcoming 14A process at the facility—a move that helped Intel’s stock more than double in April.

Chip analyst Ben Bajarin of Creative Strategies called the Terafab a “15-year strategy,” noting that Musk’s companies need supply chain control because they would struggle to get priority at TSMC, where Nvidia and Apple have locked up capacity for years. Musk has also cited geopolitical risks as a key driver.

SpaceX will handle the initial phase of the scaled-up Terafab, while Tesla builds a $3 billion research fab in Austin capable of a few thousand wafers per month. SpaceX filed confidentially for an IPO in April, weeks after merging with xAI in a deal valuing the combined entity at $1.75 trillion.

Source: CNBC