Elon Musk to Spend Hundreds of Billions on In-House AI Chips

Elon Musk's SpaceX is projected to invest a minimum of $55 billion in Texas to establish a semiconductor manufacturing plant, aiming to supply hardware across his entire corporate ecosystem.

Elon Musk CEO of Spacex

According to The New York Times, the sheer scale of billionaire Elon Musk's ambitious plan to construct a massive computer chip factory in Texas is gradually coming to light.

This information was disclosed in a public hearing notice filed on May 7 in Grimes County, Texas—the proposed site for the facility. The initial phase of the SpaceX-led semiconductor project is estimated to cost at least $55 billion. The total investment for the project could potentially reach a staggering $119 billion.

Dubbed "Terafab," the project is designed to supply AI chips for both SpaceX and Tesla, Musk's electric vehicle company. According to the notice, SpaceX is seeking tax incentives for the development, a matter slated for discussion at a hearing next month.

Terafab emerges amidst a fierce global race in chip manufacturing, driven by the urgent need to meet the demands of rapidly advancing technology. Currently, the valuation of AI chipmaker Nvidia has skyrocketed, propelling the brand to become the world's most valuable company.

Tesla is not alone in this endeavor; other tech giants, including Google and Amazon, are also aggressively developing their own proprietary AI chips.

Industry experts suggest that Elon Musk's venture could also mark a turning point for Intel, the American semiconductor giant that has faced significant headwinds in recent years. In April, sources indicated that Intel had confirmed its involvement in the Terafab project to "design, manufacture, and package ultra-high-performance chips at scale."

SpaceX has yet to issue an official comment. However, the public filing released on May 7 described the initiative as "a landmark investment in domestic semiconductor manufacturing capabilities."

Beyond its core operations in space launch services and satellite internet provision, Musk is leveraging SpaceX to propel his broader AI ambitions. Previously, SpaceX acquired xAI—an artificial intelligence startup also founded by Musk—thereby establishing a consolidated entity with an estimated valuation reaching $1.25 trillion.