On June 3, county commissioners are expected to consider a property tax abatement agreement for the facility, which the notice says has an estimated capital investment of $55 billion for the initial phase, and a total capital investment of $119 billion if additional phases are constructed. The notice represents the first indication of a possible site for Musk's plans for SpaceX and Tesla to build the world's largest chip manufacturing plant.
SpaceX has filed a property tax abatement application in Grimes County, Texas, for a semiconductor fab that would cost $55 billion in its initial phases and up to $119 billion if all planned expansions are completed.
Musk planned to start this work with an advanced technology fabrication plant at the Tesla Gigafactory Texas campus in Austin. The full-scale Terafab would need a larger site – and two separate facilities – to make different kinds of chips: one designed for Tesla’s electric vehicles and Optimus humanoid robot and another made to withstand the rigors of space.
Musk has previously outlined plans for the project, dubbed “Terafab,” that will also see Tesla contributing resources. The companies have roped chipmaking giant Intel into the effort, aiming to develop chips for AI servers, satellites, SpaceX’s proposed data center in space, as well as ...
Musk has previously outlined plans for the project, dubbed “Terafab,” that will also see Tesla contributing resources. The companies have roped chipmaking giant Intel into the effort, aiming to develop chips for AI servers, satellites, SpaceX’s proposed data center in space, as well as autonomous Tesla vehicles and robots.
What makes this announcement unusual is its timing. Rather than seeking federal CHIPS Act funding upfront, Terafab appears to be self-financed in its early stages, with the tax abatement request serving as the primary public incentive.
Elon Musk's SpaceX (SPAX.PVT) has filed plans to invest $55 billion into building a Terafab facility in Texas, which will allow the company to produce in-house chips for its AI and robotics projects.
The chip complex outside Austin would be designed to manufacture chips for SpaceX, xAI and Tesla, and would be jointly built by those companies. Musk said in a post on X that xAI "will be dissolved as a separate company" and will be called SpaceXAI. In April, Intel announced it will be joining the Terafab project to help "design, fabricate, and package ultra-high-performance chips at scale."
Musk’s teams contacted major chip equipment suppliers for the $25 billion Terafab AI chip plant, which Intel was named as the foundry partner for, arguably the single largest catalyst for the stock’s surge. Nvidia, despite pausing its own 18A testing over yield concerns, invested $5 billion in Intel common stock, a vote of confidence in the company if not yet in the process node. The national security case for domestic chip manufacturing has only strengthened since the CHIPS Act was written.
The TeraFab emerges when the U.S. is seeking to regain semiconductor manufacturing capacity. The CHIPS Act, investments by Intel, TSMC’s Arizona plant, Samsung’s Texas facilities, and new advanced packaging projects reflect shared concern: dependence on Asia for critical technology vital to defense, cloud, automotive, telecommunications, and AI.
Yeah, but they'll be porked once Tesla gets terafab up and running! Just kidding. That venture will have disappeared within 5 years. ... I got out of TSMC recently due to concerns about China. I don't trust trump to backup Taiwan. ... Business quality: 10/10 Competitive moat: 10/10 Valuation: ...
He thinks that for the full expansion to be warranted, “We would have to be in a world where there are millions of humanoid robots out there and hundreds of millions of autonomous Teslas out there.” He says Tesla Terafab’s relationship with Intel is based on long-term propositions rather than short-term demand.
And similar to Samsung, TSMC confirmed a 30% bonus bump for its employees this year given robust global demand. All this despite the efforts by many of its top customers like Elon Musk to boost independent chip fab infrastructure with its Terafab initiative, in partnership with Intel and others.
Wei went further, revealing that Intel remains one of TSMC's top ten customers, bluntly stating that "TSMC wants to earn his money," encapsulating the delicate relationship of both competition and cooperation between the two. Regarding the recent joint announcement by Tesla, SpaceX, and xAI to establish a massive wafer fabrication facility named "Terafab" in Austin, Texas, Wei responded only with a terse "wish him well," declining further comment.
TSMC chair says CoPoS could scale within years while downplaying risk from Terafab · Nvidia's Jensen Huang to meet South Korean business leaders beyond HBM sector · CXMT's South Korean hiring spree puts Samsung, SK Hynix memory lead on alert · TSMC says AI demand is straining entire supply chain, not just chipmakers ·
Terafab will produce two types of chips: the A15 and A16 chips, optimized for edge inference in Tesla's Optimus robots and self-driving cars, and a second type of rugged, high-powered chip designed for use in orbital data centers in space.
This is all against the reality of TSMC’s top customers scrounging to make their own AI chips against their top ‘Frenemies’ supplier Nvidia. With Nvidia founder/CEO Jensen Huang balancing the realities of US/China and Taiwan geopolitics. And Elon Musk’s ambitions to counter with his own aspirational ‘Terafab’ chip facilities in partnership with Intel and others.
Hanmi Semiconductor expands Taiwan and US push for potential Terafab supply chain role Tomorrow's Headlines ... TSMC’s Wei says it will not raise prices aggressively as AI bottlenecks spread Tomorrow's Headlines
Large customers like Apple are exploring Intel and Samsung. And Elon Musk's Terafab is also working with Intel’s foundry. This raises longer-term competitive risks for TSMC's foundry market share.
Within five years, SpaceX’s Terafab will either become the world’s first profitable space-grade semiconductor foundry serving external customers, or it will force TSMC to create a dedicated “mission-critical” business unit with pricing and service levels that reflect true vertical integration competition...