SpaceX and Tesla's chip factory price could exceed the space company's IPO proceeds

Elon Musk's space company SpaceX has estimated the cost of building the Terafab chip manufacturing plant, which plans to realize together with Tesla, at least $55 billion. This follows from a notice on the website of Grimes County in the state of Texas, in which the plant may be built. Attention to the document was drawn by Bloomberg.

It is about a "vertically integrated semiconductor and advanced computing manufacturing plant". "The estimated amount of capital investment for the initial phases is $55 billion, the total estimated investment (if additional phases are realized) is $119 billion," the document says. Thus, the total amount of investment in the plant may exceed the amount SpaceX expects to raise from its record IPO, Bloomberg noted. SpaceX expects to raise about $75 billion in the IPO at a $2 trillion valuation of the entire business, the agency wrote in April.

Representatives for SpaceX and Tesla did not promptly respond to Bloomberg's inquiries. Grimes County is just one of several locations being considered to build "the largest and most technologically advanced chip plant in the world," Elon Musk said on social network X.

Elon Musk said that Tesla needs to build and launch its own TeraFab chip factory, in January 2026. In March, he announced its construction in Austin - the capital of the state of Texas. The billionaire emphasized the need to launch its own chip production for projects in robotics, space and artificial intelligence. He said the semiconductor industry is growing too slowly and is not keeping up with the growing demand for chips for both his projects and the technology sector as a whole. "Either we build Terafab or we won't have chips, and we need them, so we're building Terafab," Musk said.

According to the billionaire, the plant will be able to provide up to one terawatt of computing power per year, which is the amount he estimates companies will need as investment in artificial intelligence and robotics grows. The enterprise is planned to focus on the production of chips on 2-nm process - one of the most advanced to date (we are talking about a generation of semiconductors with a minimum size of transistors, which allows you to improve performance and reduce power consumption of devices), notes Bloomberg.

After the presentation of the project, part of the market was skeptical of the initiative: the construction and management of modern semiconductor factories is a complex and highly competitive business in which Musk has no experience, writes Bloomberg agency. His goal is to compete with such leaders as Taiwan Semiconductor Manufacturing Company, and on volumes that far exceed the current capacity of the industry.

However, as Bloomberg reported in April, Musk's team has begun talks with chip equipment manufacturers including Applied Materials, Tokyo Electron and Lam Research to get estimates on the cost and timing of supplying the necessary equipment.

Musk also partnered with Intel in early April. As part of the agreement, Tesla plans to invest about $3 billion in a chip development research center in Texas, while Intel will support the project by providing expertise in chip design, manufacturing and packaging.

This article was AI-translated and verified by a human editor