Elon Musk's two biggest companies are pooling money to build their own chips. SpaceX and Tesla are investing $16.8 billion in a Texas semiconductor plant dubbed "Terafab," according to India Today. Coverage on MSN frames the same push as a "$16.5 billion AI chip bet," so the exact figure varies by outlet.
The site is Grimes, Texas, and the ambition is not subtle: MSN reports the facility is intended to be the world's largest building. Its output is earmarked for AI chips destined for Optimus humanoid robots, Cybercab autonomous vehicles, and space-based data centers.
The near-term catalyst is Tesla's next-generation AI5 chip, which MSN reports has hit a major manufacturing milestone, with Musk quoted as saying "the first chips will be built in America." That same report notes the implications reach past self-driving cars, pointing to Optimus, which runs on a dramatically smaller battery than a Tesla car and therefore needs unusually power-efficient silicon.
Separately, an analysis by SemiAnalysis, surfaced by Techmeme, argues SpaceX is on track to build roughly 10 gigawatts of compute capacity by the end of 2027, with 6 to 8 gigawatts arriving in 2027 alone. Using an assumption of about $100 billion of inference revenue per gigawatt per year, SemiAnalysis estimates that could support a $300 billion annual revenue run-rate.
Two threads are worth separating. One is manufacturing: a domestic fab reduces reliance on overseas foundries for chips Musk's companies increasingly design themselves. The other is scale: the SemiAnalysis projection treats SpaceX not just as a rocket company but as a would-be hyperscaler selling AI compute.
Why it matters: if the numbers hold, Musk is attempting to own the entire AI stack — the chip, the factory that prints it, and the power-hungry data centers that run it — rather than renting any part of it from someone else.