May 07, 2026 /SemiMedia/ — A newly disclosed public filing in Grimes County, Texas, showed that the “Terafab” semiconductor manufacturing project could become one of the world’s largest chip investment plans, with first-phase spending estimated at more than $55 billion and total investment potentially reaching $119 billion after full expansion.

The project is being led by SpaceX and is currently seeking property tax incentives from local authorities. A public hearing related to the tax package is scheduled for June 3. The planned site near Austin, Texas, is expected to include logic chip production, memory manufacturing and advanced packaging facilities within a single semiconductor campus.

Tesla and artificial intelligence company xAI are also expected to participate in the project alongside SpaceX. The companies plan to share future production capacity for AI computing, electric vehicle systems and space-related technologies. Elon Musk has previously described Terafab as a long-term effort to build a more integrated semiconductor supply chain.

Intel confirmed in April that it would join the project as a major external partner. The company is expected to provide chip design, wafer manufacturing and packaging services for high-performance processors. The agreement marked one of the first large outside manufacturing programs for Intel’s foundry business and drew strong attention from the semiconductor industry.

According to earlier comments from Musk, Tesla plans to use Intel’s upcoming 14A process technology for automotive AI chips and autonomous driving processors at the Terafab site. Industry analysts said the rapid growth of AI infrastructure and high-performance computing has tightened global wafer supply, especially for advanced nodes already heavily booked by companies such as Nvidia and Apple.

Creative Strategies analysts said the Terafab project reflects a long-term supply chain strategy focused on securing stable access to advanced semiconductor capacity. They noted that increasing dependence on AI chips and automotive processors is pushing more technology companies to seek greater control over manufacturing resources.

Musk has also repeatedly warned about geopolitical risks and possible supply disruptions in the semiconductor market. He said existing suppliers may not be able to meet Tesla’s future demand for AI and self-driving systems, making internal chip manufacturing capability increasingly important.

The project remains in an early development stage. Tesla is expected to first build a smaller research-focused wafer fab in Austin with an investment of about $3 billion and monthly output of several thousand wafers for process testing and development work. Larger-scale production would later be expanded under SpaceX leadership.

At the same time, SpaceX is reportedly preparing for a future public listing. Market reports said the company confidentially filed for an IPO in April, while its combined valuation with xAI has reached about $1.75 trillion.