Elon Musk’s Terafab chip factory in Texas could cost up to $119 billion, filing shows

Elon Musk arrives at the federal courthouse during proceedings in the trial over his lawsuit against OpenAI in Oakland, California, on April 30, 2026.

Josh Edelson | Afp | Getty Images

Elon Musk’s plans for a huge chip manufacturing plant in East Texas will cost at least $55 billion for the first phase, and up to $119 billion if the full buildout comes to fruition.

The estimated capital investment amounts were disclosed in a public hearing notice on Wednesday in Grimes County, Texas, home of the prospective facility. The notice said SpaceX, which is controlled by Musk, is seeking a property tax abatement agreement from the county.

Grimes County will hold a public hearing on June 3, to consider the proposed tax breaks.

Musk, who’s also CEO of Tesla, is aiming for Terafab to be the “most epic chip-building effort ever – combining logic, memory and advanced packaging under one roof,” according to a post on X last month from SpaceX, which now owns artificial intelligence company xAI. He officially launched the project in March.

The chip complex outside Austin would be designed to manufacture chips for SpaceX, xAI and Tesla, and jointly built by those companies.

In April, Intel announced it will be joining the Terafab project to help “design, fabricate, and package ultra-high-performance chips at scale.” It’s the first major outside commitment for the capital-intensive foundry side of Intel’s business, which to date has only manufactured chips for its own products.

During Tesla’s first-quarter earnings call last month, Musk said Tesla plans to use Intel’s forthcoming 14A process to produce chips at the facility. Intel’s stock popped on the news and had its best month ever in April, more than doubling in value.

Intel is positioned to benefit from the ongoing AI boom as manufacturing capacity is getting harder to come by at Taiwan Semiconductor Manufacturing, where giants like Nvidia and Apple have reserved their chipmaking availability for years to come.

Ben Bajarin, a chip analyst at Creative Strategies, said Musk is embarking on a “15-year strategy,” knowing that his companies need to control the supply chain as “it would be very, very hard for them to have any priority at TSMC.”

“You don’t just wake up one day and say, ‘I’m going to be a foundry,'” Bajarin said. “It’s a very mature process with constraints across the board on how these things get made.”

On a Tesla earnings call in January, Musk said key chip suppliers couldn’t possibly produce enough hardware to satisfy the automaker’s needs, and that building a Terafab was “actually also going to be very important to ensure that we are protected against any geopolitical risks.”

Musk said on the more recent earnings call that Tesla was “still working out the details of the Terafab deployment,” and that the company would be building a research fab at its factory in Austin, costing around $3 billion and “capable of maybe a few thousand wafers per month.”

“SpaceX is going to take care of the initial phase of the scaled up Terafab,” Musk said on the call.

SpaceX’s financials have been coming to light ahead of a planned public offering in the coming months. The company filed confidentially for an IPO in April, weeks after the merger with xAI valued the combined entity at $1.75 trillion.

Tesla and SpaceX didn’t immediately respond to a request for comment.

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