# The first stage of the chip manufacturing project led by his rocket company, SpaceX, will cost at least $55 billion.

*semiconductor, genai · news · 2026-05-07 · The New York Times*

## Key points

- SpaceX plans to build a chip manufacturing plant in Grimes County, Texas called Terafab.
- The first stage of Terafab will cost at least $55 billion, with total costs up to $119 billion.
- The plant aims to supply AI chips for both SpaceX and Tesla's operations.
- SpaceX is seeking tax breaks for Terafab, with discussions scheduled at a hearing next month.
- SpaceX is preparing for an IPO as soon as June, potentially one of the largest IPOs ever.

The scale of Elon Musk’s ambitious plan to build a giant computer chip plant in Texas is becoming clear — and it is stunning. The first stage of the chip manufacturing project led by his rocket company, SpaceX, will cost at least $55 billion, according to a public hearing notice filed on Wednesday in Grimes County, Texas, where the factory will be located. Total spending could reach $119 billion. The project, called Terafab, is intended to supply chips to power artificial intelligence for SpaceX and Tesla, Mr. Musk’s electric car company. SpaceX is also asking for tax breaks for the project, something that will be discussed at a hearing next month, according to the notice. SpaceX is pursuing the chip manufacturing plant as the rocket company prepares to go public as soon as June, in what is likely to be one of the largest initial public offerings ever. Even as SpaceX’s main businesses involve launching rockets and offering satellite internet, Mr. Musk has increasingly used the company to push his A.I. ambitions. This year, SpaceX bought xAI, his A.I. start-up, creating a company with a valuation of $1.25 trillion. Last month, SpaceX announced a $60 billion deal to acquire the A.I. start-up Cursor, which makes a code-writing assistant. And Mr. Musk has also pitched the idea of A.I. data centers that would orbit Earth. Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times. Thank you for your patience while we verify access. Already a subscriber? Log in. Want all of The Times? Subscribe.

**Companies:** SpaceX, Tesla
**Countries:** United States

[Read the full story on The New York Times](https://www.nytimes.com/2026/05/07/business/spacex-chips-terafab.html)

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