Musk’s Texas Terafab Chip Plant Could Cost Up to $119 Billion
AUSTIN, Texas — Elon Musk’s planned Terafab chip fabrication facility in Texas could cost as much as $119 billion, according to a filing reported Tuesday by CNBC.
The semiconductor plant is intended to produce chips for Musk’s companies, including Tesla, SpaceX and his artificial intelligence venture xAI, according to CNBC. The facility would support domestic chip manufacturing at a time when the U.S. is seeking to reduce its dependence on foreign semiconductor suppliers.
The projected cost exceeds that of most existing semiconductor projects in the United States. By comparison, Taiwan Semiconductor Manufacturing Co.’s ongoing Arizona fab complex carries a price tag of roughly $65 billion across multiple phases. Intel’s Ohio fab campus is projected at approximately $100 billion over the coming decade.
For the AI industry, the Terafab project signals Musk’s intent to vertically integrate his AI supply chain. xAI, which operates the Colossus supercomputer cluster in Memphis, Tennessee, has been scaling its compute infrastructure to compete with OpenAI, Google DeepMind and Anthropic.
The filing did not specify a timeline for completion or how the project would be financed, according to CNBC. It remains unclear whether Musk would seek federal incentives under the CHIPS and Science Act, which has already allocated billions to Intel, TSMC and Samsung for U.S.-based manufacturing.
Texas has emerged as a hub for semiconductor investment, with Samsung operating a fab in Austin and expanding in nearby Taylor. The state offers tax incentives for large-scale manufacturing projects.
The filing comes as demand for AI-capable chips continues to outstrip supply across the industry. Major AI companies have faced persistent GPU shortages, driving several to explore custom silicon programs or direct manufacturing partnerships.
Musk has not publicly commented on the filing. Representatives for xAI, Tesla and SpaceX did not immediately respond to requests for comment.