The Terafab project, led by Elon Musk’s SpaceX, represents one of the largest planned investments in American chip manufacturing. The first stage alone is expected to cost at least 55 billion dollars, with total spending possibly reaching 119 billion dollars, The New York Times (open copy) and many other technology business sources report. The factory will be built in Grimes County, Texas. SpaceX has also requested tax breaks for the project, which will be discussed at a public hearing next month.
Terafab aims to produce advanced chips to support artificial intelligence work at SpaceX and Tesla. The project comes as SpaceX prepares for a possible initial public offering, when the company would first sell shares to the public, potentially one of the largest such offerings ever.
Industry context and partnerships
Musk has expanded SpaceX’s role beyond rockets and satellite internet into artificial intelligence. This year SpaceX acquired xAI, Musk’s artificial intelligence start-up, creating a combined valuation of 1.25 trillion dollars. SpaceX also reached a 60 billion dollar deal to buy Cursor, a company that builds tools for writing computer code. In addition, Musk has proposed placing artificial intelligence data centers in orbit around Earth.
The Terafab effort fits into a wider global race to build enough chips for fast-growing artificial intelligence demands. Musk has called Terafab the most ambitious chip-building effort yet, combining several types of chip production. Companies such as Nvidia, Google, and Amazon are also developing their own specialized AI chips. Intel announced it will join the Terafab project.
SpaceX recently agreed with the artificial intelligence (AI) company Anthropic to provide computing power from its Colossus 1 data center in Memphis, which contains more than 220,000 advanced Nvidia chips. "As part of this agreement, we have also expressed interest in partnering with SpaceX to develop multiple gigawatts of orbital AI compute capacity," says Anthropic.