SpaceX Eyes $119B Texas Chip Plant as Musk Moves to Lock Down AI Supply

Elon Musk’s SpaceX is taking early steps toward a huge chip plant in Texas, with a plan that could cost as much as $119 billion over time.

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The plan was laid out in a public notice posted by Grimes County, Texas. SpaceX said it wants to build a “next generation, vertically integrated semiconductor manufacturing and advanced computing fabrication facility” near Gibbons Creek Reservoir.

The site is tied to Musk’s Terafab plan, which he first laid out in March. The idea is to build a chip base that could serve SpaceX, Tesla Inc. (TSLA), and Musk’s other AI and robot plans.

Musk framed the need in simple terms. “We either build the Terafab, or we don’t have the chips, and we need the chips, so we build the Terafab,” he said.

A Big Bet on Chip Supply

The goal is bold. The plant would aim to produce 2-nanometer chips, among the most advanced in the world. Musk has also said the project could one day support a terawatt of compute power per year.

That would place SpaceX in a field led by Taiwan Semiconductor Manufacturing Company Limited (TSM), Samsung, and Intel Corporation (INTC). However, chip fabs are hard to build, costly to run, and slow to scale. SpaceX has no track record in this field, which is why the plan is likely to draw both hype and doubt.

Still, the move fits Musk’s long-term style. He often tries to bring key parts of the supply chain in-house when he thinks outside firms are moving too slowly. In this case, the need is clear. AI, self-driving tech, robots, rockets, and space web systems all need more chips.

Meanwhile, Bloomberg has reported that Musk’s team has reached out to chip tool firms such as Applied Materials Inc. (AMAT), Tokyo Electron Limited (TOELY), and Lam Research Corporation (LRCX) to ask about cost and lead times for fab gear.

For now, this is not yet a done deal. The Grimes County notice was tied to a public hearing set for June 3. Even so, the filing shows that Musk is at least testing how far his chip plan can go. For investors, the key point is simple. If Terafab moves ahead, it could become one of the largest U.S. chip bets ever.

We used TipRanks’ Comparison Tool to align notable chip manufacturers appearing in the piece alongside major chip stocks such as Broadcom (AVGO) and Advanced Micro Devices (AMD). This is a great way to gain an in-depth view of each stock and the broader chip industry.