SpaceX has a $55 billion plan to build AI chips in Texas

SpaceX has unveiled plans for a massive AI chip manufacturing facility called Terafab in Austin, Texas, with initial investments of at least $55 billion and potential total costs reaching $119 billion if additional phases are built. The project, detailed in a public hearing notice for tax breaks in Grimes County, will be jointly operated by SpaceX and Tesla to produce chips for both companies, targeting AI, robotics, and space-based data centers. Elon Musk says the plant could support up to 200 gigawatts per year of computing power on Earth and up to one terawatt in space.

Intel has signed on to help design and build Terafab, touting its ability to "design, fabricate, and package ultra-high-performance chips at scale" to accelerate the goal of producing 1 TW/year of compute. The move comes as SpaceX expands its data center footprint, including its Colossus facility in Memphis, which recently signed an agreement to power Anthropic's AI models. The Terafab plant represents Musk's most ambitious foray into chip manufacturing, aiming to reduce reliance on external suppliers and secure chips critical for his AI and space ambitions.