Elon Musk Plans To Spend Up To $119 Billion On Chip Plant To Take On TSMC
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Elon Musk’s SpaceX is heading for what may be the largest IPO in history this summer, but a public filing Wednesday revealed the company plans to spend up to $119 billion on Terafab, a Texas chip plant designed to take on Taiwan Semiconductor Manufacturing Co. (NYSE:TSM).
An application posted to the Grimes County website lays out an initial $55 billion build, with the full project potentially reaching $119 billion if subsequent phases are completed.
The figure has nearly tripled from the $20 billion price tag Musk floated when he unveiled Terafab in March, and Bernstein analysts have estimated that fully realizing his terawatt vision could require closer to $5 trillion and 358 individual fabs.
Musk has framed the project as a necessity rather than an option, telling investors the global chip industry is moving too slowly to keep pace with his AI, robotics and space ambitions.
The Terafab joint venture with Tesla Inc. (NASDAQ:TSLA) would aim to produce next-generation chips using Intel Corp.’s (NASDAQ:INTC) 14A process, ultimately reducing his companies’ reliance on Nvidia Corp. (NASDAQ:NVDA) for training silicon.
TSMC has already signaled it isn’t worried.
CEO C.C. Wei told analysts on a recent earnings call that new chip plants take two to three years to build, with another one to two years to ramp, and that there are “no shortcuts.”
Polymarket Sees SpaceX As 2026’s Biggest IPO
The Terafab disclosure lands weeks before SpaceX is expected to file its public prospectus. Polymarket traders give the company an 87% chance of being the largest IPO of 2026 and a 59% chance the closing valuation lands between $1.5 trillion and $2.5 trillion.
SpaceX is reportedly targeting a $75 billion raise, meaning the $55 billion initial Terafab phase alone could consume the bulk of IPO proceeds before any cash reaches Starship or Starlink.
Short-seller Jim Chanos has joked that the full vision could swallow 16% to 40% of US GDP, while Morgan Stanley analysts say initial chip output is unlikely before mid-2028 even under an aggressive build-out.
The proposed site is the former Gibbons Creek coal plant in Grimes County, which Charah Solutions demolished and parceled off in 2021 to undisclosed buyers. The county Commissioners Court will hold a public hearing on the abatement on June 3.
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