SpaceX to Build $55 Billion AI Chip Factory in Texas

SpaceX is moving forward with plans to construct a major semiconductor manufacturing facility in Texas dedicated to producing artificial intelligence chips. The company intends to invest at least $55 billion in the project, known as Terafab, according to details in a public hearing notice filed in Grimes County for a meeting to request tax breaks.

If additional phases are constructed, the total investment could reach as much as $119 billion. The factory will be operated jointly by SpaceX and Tesla to make chips used for AI, robotics and space-based data centers. When the project was first announced in March, the company outlined ambitions to produce enough chips to support up to 200 gigawatts per year of computing power on Earth and up to one terawatt in space.

Intel announced last month that it would help design and build the facility. The chipmaker stated that its ability to design, fabricate and package ultra-high-performance chips at scale would help accelerate the plant's goal of producing one terawatt per year of compute to power future advances in AI and robotics.

The Texas plant forms part of broader efforts to expand data center capacity. The company currently operates a data center called Colossus in Memphis, Tennessee, that recently signed an agreement to power Anthropic's AI models.

The semiconductor factory represents an escalation in efforts to secure computing resources for artificial intelligence development. Chips produced at the site are intended for use by both the rocket company and its sister firm focused on electric vehicles and autonomous systems.

Public filings for tax incentives in Grimes County outline the scale of the proposed investment. The hearing notice provides the first concrete financial figures attached to the project since its initial announcement.

“Our ability to design, fabricate, and package ultra-high-performance chips at scale will help accelerate Terafab’s aim to produce 1 TW/year of compute to power future advances in AI and robotics.”

The project comes as demand for specialized AI hardware continues to grow across multiple sectors, including space operations that would require substantial onboard computing capability. Details remain limited on exact timelines for construction or when production might begin.

The tax break request suggests the company is seeking local government support to offset part of the enormous capital expenditure.