Tesla SpaceX xAI deepen ties on Terafab Texas chip complex with Intel
Elon Musk's answer to the AI chip shortage is to build his own supply. Tesla $TSLA, SpaceX and xAI are backing a Texas semiconductor complex called Terafab, with SpaceX putting the initial investment near $55B and total spend estimated around $119B. Intel $INTC has joined the pro
Elon Musk is trying to solve the AI chip shortage the hard way, by building the factory himself. Tesla $TSLA, SpaceX and xAI are backing a large semiconductor complex near Austin called Terafab, a project Musk first outlined in March. SpaceX has estimated an initial investment of around $55 billion and total spending of roughly $119 billion across all phases of the prototype fab. Intel $INTC has joined the effort, with the partnership confirmed after Musk met Intel chief executive Lip-Bu Tan. The stated ambition is unusually large: more than one terawatt of AI compute capacity per year, aimed at the "edge inference" that Musk says Tesla vehicles and Optimus humanoid robots will require, plus the specialized chips needed for orbital AI infrastructure. The reasoning behind the bet is supply, not just ambition. Musk has argued that existing fabrication capacity produces only a small fraction of what his companies will eventually need, which is the case he is making for vertical integration rather than relying on outside foundries. For Intel, the tie-up is a chance to anchor its manufacturing roadmap to one of the most aggressive projected sources of chip demand. The plan remains early, and building leading-edge fabs is among the most expensive and technically demanding undertakings in industry.