SpaceX files plan for $55 billion Terafab chip facility in Texas

May 6 (Reuters) - Elon Musk's SpaceX ‌has proposed an ​initial investment ​of $55 billion to build a semiconductor manufacturing facility, called Terafab, in Texas, according to a filing made public on Wednesday.

The facility, a joint project ‌with Tesla, comes as Musk seeks to secure in-house access to advanced ⁠chips, though analysts say the scale of capacity he has outlined would likely require far greater investment.

SpaceX is ‌also targeting a June IPO that ‌could value the company at around $1.75 trillion.

Musk has been tightening integration of AI efforts across his companies, with SpaceX acquiring his startup xAI earlier this year in a ​deal focused on building space-based data centers for artificial intelligence processing. The combined entity was valued at $1.25 trillion.

The Terafab project would involve a multi-phase chip fabrication and advanced ⁠computing complex aimed at boosting domestic semiconductor production in the United States. SpaceX estimates total investment could rise to $119 ​billion if additional phases are completed.

The facility is planned in Grimes County within a newly designated reinvestment zone, where local officials are expected ​to consider a property tax abatement agreement at a ‌June meeting.

The proposed facility could help reduce reliance on external suppliers such as Samsung and Taiwan Semiconductor Manufacturing Co.

SpaceX flagged plans to "manufacture our ⁠own GPUs" as part of "substantial capital expenditures" outlined in its S-1 registration, according to excerpts reviewed by Reuters.

The filing also highlighted risks around supply, noting the company lacks long-term contracts with many direct ⁠chip suppliers and will continue to rely significantly on third parties. SpaceX added there is no assurance ​it will meet its Terafab objectives within expected timelines, or at all.

The plan aligns with a broader U.S. push to expand domestic semiconductor manufacturing amid geopolitical tensions and supply chain risks.

Signaling efforts to bring ‌in external manufacturing expertise, Musk said last month in Tesla's first-quarter earnings call that the Terafab will use chipmaker Intel's 14A process ‌to produce chips.

The facility is intended to supply chips for Tesla's self-driving systems, humanoid robots and ⁠AI data centers, showcasing the scale ‌of compute demand across Musk's ​businesses, as he ramps up investment in building end-to-end computing capability.

(Reporting by Anhata Rooprai and Akash Sriram in Bengaluru; Editing by Anil D'Silva and ‌Devika Syamnath)

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