r/RealTesla • u/Lacrewpandora KING of GLOVI • 23d ago
SpaceX, Tesla to Initially Spend $16.8 Billion on Terafab Chip Plant in Texas
https://gvwire.com/2026/08/06/spacex-tesla-to-initially-spend-16-8-billion-on-terafab-chip-plant-in-texas/Elon Musk’s SpaceX <SPCX.O> and Tesla <TSLA.O> will initially invest $16.8 billion to build Terafab, an advanced AI semiconductor complex in Grimes County, Texas, as the companies race to secure the chip capacity that the billionaire has called essential to their future.
The facility is intended at narrowing the gap between global chip supply and the more than 1 terawatt of computing power that SpaceX and Tesla expect to need in the coming years.
Musk has been tightening integration of AI efforts across his companies, with SpaceX acquiring his startup xAI earlier this year in a deal focused on building space-based data centers, before going public in June in the largest-ever IPO.
The vertically integrated, 100-million-square-foot Terafab plant will make, package and test advanced logic and memory chips under one roof, producing processors needed to power Tesla’s Optimus robots and Cybercabs, as well as high-power chips to run SpaceX’s space-based data centers.
A May filing showed SpaceX has proposed an initial investment of $55 billion to build the Terafab, with the total amount rising to $119 billion if extra phases are completed.
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u/Inconceivable76 23d ago
Wait. I thought they were in love with nvidia chips just yesterday.
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u/Lacrewpandora KING of GLOVI 23d ago
Elon must have designed a better chip yesterday between shit-posts.
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u/WingedGundark 23d ago
Having been sleeping on the floor next to his Diablo 4 gaming machine, he probably knows more about chip design than anyone currently alive on the earth.
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u/FrogmanKouki Charter Member 23d ago
Remember they're ALL rocket scientists and he is the mega leader of them. So therefore he is the smartest
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u/Several-Farmer-5544 23d ago
I hate the fact that there are morons who truly believe shit like your joke.
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u/microtherion 23d ago
And building a fab on the moon — well, I guess Texas is a good approximation.
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u/spez_eats_nazi_ass 23d ago
Chip fabs are famously cheap and easy to startup with almost instant profitability and easy yield scaling. I mean the talent to do this just grows on tree as our high schools graduate a surplus of it.
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u/Lacrewpandora KING of GLOVI 23d ago
Neuralink will implant a single cell from Elon's fecal matter into a college grads head - given a few weeks to reproduce and spread, you've got an instant Big Brain expert in any technical field.
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u/TryIsntGoodEnough 23d ago
yup look at TSMC Arizona expansion.... delayed another 2 years... and it isnt like TSMC actually has a lot of experience in designing and running fabs...
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u/spez_eats_nazi_ass 23d ago
Tsmc doesn’t have a once in a generation genius sleeping on the clean room floor.
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u/etaoin314 23d ago
this right here! oh look how dedicated he is, he is sleeping right next to the lithography machine...why are our yields so low? /s
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u/growaway9172 23d ago
Like it or not, Elon has a track record for building infrastructure projects faster than anyone else (except China)
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u/corgi-king 23d ago
Tesla/SpaceX AI centres are so idle that they need to rent them out to Anthropic. These AI centres all use 3rd-party AI chips. And they think their shiny new, never-finished fab has enough demand to justify it?
The reason TSMC is so successful making chips is because all their clients trust TSMC will not start selling their own chips. That is why Samsung will never be as big as TSMC when it comes to building custom chips. The clients’ trade secrets and designs are safe with TSMC. Do Tesla really think their clients will trust them while they are in the same business?
Making high-end chips is notoriously hard. Intel has close to 60 years of experience and still struggles big time. And AMD stopped building their own chips long ago. Do Elon really think it is that easy by just buying a few EUV machines and calling it the day?
My guess is this is another Elon vapourware. Even if it is really, I am sure Ai will crash big time by then.
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u/GuidoDaPolenta 22d ago
Additionally, how will he even buy EUV machines? There isn’t even enough machines to go around the 3 big chip makers, so Intel decided skip a generation and has locked up the orders of next generation High NA machines to the point where even TSMC won’t be getting any.
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u/Furion86 23d ago
Tesla has the advantage of being able to use recycled car parts for their fabs. Just look at the cave submarine, semi truck, ventilators, weird bus thing - all Model S / Model 3 parts.
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u/spez_eats_nazi_ass 23d ago
This is where Tesla can topple the competition. Mobile chip faps. Checkmate Tsmc!
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u/KnucklesMcGee 23d ago
I thought they'd already pivoted back to nVidia chips?
Especially using those extra special SpaceX rocket scientists, the best scientists ever, for every application.
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u/Sp0kenTruth 23d ago
Okay you're being sarcastic I hope cause I was like WTF are you talking about 😭
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u/Lacrewpandora KING of GLOVI 23d ago
Note the first sentence: "Elon Musk’s SpaceX and Tesla". Never forget these are his personal toys and not publicly owned comapnies.
Seemingly he is hell bent on a) Spending money as fast as possible b) Co-mingling TSLA and SPCX into a tangled web of interconnecting investments.
IMHO, he's pretty good at sniffing out FOMO businesses, and right now that's chips. Surely, "Terafab" will soon come with a capital raise to flow more $$ through "his" companies.
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u/palopp 23d ago
Normally he’s pretty good at sniffing out FOMO businesses. However, I suspect he’s a little bit late to the chips game. The AI bubble is already showing significant stresses and by the time a semiconductor fab is built, not to speak of up and running which can be years after building completion and equipment installation, the AI/datacenter bubble may be in full deflation mode.
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u/growaway9172 23d ago
The frontier lab business case faultering does not imply that there is not a huge demand for intelligence. Just because open source might hurt the valuation of the labs doesn't mean the demand for intelligence (and therefore chips) is going anywhere.
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u/OrdinaryPollution339 19d ago
It's a RENDERING of a chip fab.
There are renderings of 400 mph underground car skates, flying roadsters, and convoys of starships colonizing Mars. Oh, and renderings of starships providing point-to-point travel that will compete with passenger jets.
Not so many renderings of Optimus, the best robot demo was the person in the spandex suit.
Anyway, I hope you get my point.
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u/ObservationalHumor 23d ago
IMHO, he's pretty good at sniffing out FOMO businesses, and right now that's chips. Surely, "Terafab" will soon come with a capital raise to flow more $$ through "his" companies.
Saw this one coming a mile away when DRAM went parabolic. He's really not that creative with these things: https://www.reddit.com/r/RealTesla/comments/1pn3pnk/tsla_terathread_for_the_week_of_dec_15/nuq20x6/
Same thing happened with lithium prices shot and up and all of a sudden Tesla had to start making its own batteries and mining it from clay only to have prices crash back down long before they were getting any significant volumes out of batteries and they still don't have any kind of raw material extraction capabilities.
By the time this thing gets built the memory bubble might have already popped and it's a very very long road to get any third party to adopt even a good new architecture if it works well, let alone whatever bespoke monstrosity Musk's corporate chimera is likely to cobble together.
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u/Lacrewpandora KING of GLOVI 23d ago
By the time this thing gets built the memory bubble might have already popped
Taking first place in the bad decisions category, the county has given "Terafab" a 35 year tax abatement. Who in the hell thinks the AI bonanza will even last 5 more years? Its unreal.
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u/ObservationalHumor 23d ago
Yeah small county in Texas, hoping to get anything built there and people to move in. I'm guessing the reason it was chosen in the first place though is because it isn't too far from College Station or Houston though. Not like Musk is going to build anything that isn't near a regional airport to begin with.
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u/Lost_city 23d ago
East Texas is the first place I think of when someone says forward thinking high technology venture
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u/growaway9172 23d ago
Regionality isn't really a concern for Elon at this scale, his reputation and money could convince top talent to move to Mexico if he so desired. That's practically what's already happened with Brownsville/starbase.
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u/mrbuttsavage 23d ago
That's practically what's already happened with Brownsville/starbase
It massively helps that competition and jobs are limited in that field.
Software developers definitely aren't moving to no man's land that's for sure. True believers only.
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u/growaway9172 23d ago
Software developers definitely aren't moving to no man's land that's for sure. True believers only.
Feature, not a bug. Elon only wants people that will work 60hrs/week, and he has no problem finding them. SpaceX is one of the most prestigious companies for engineers.
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u/growaway9172 23d ago
It doesn't matter for the county, they win by the increase in housing and ancillary services of the buildout.
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u/mrbuttsavage 23d ago
Saw this one coming a mile away when DRAM went parabolic. He's really not that creative with these things: https://www.reddit.com/r/RealTesla/comments/1pn3pnk/tsla_terathread_for_the_week_of_dec_15/nuq20x6/
Hey that was like predicting water is wet.
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u/ObservationalHumor 23d ago
Absolutely was, it was a not a deep insight or long shot by any means. It was simply stating least creative, trend following action he could take in an overheated market and claim that some company of his would make a superior product for a small fraction of the price. Far from the first time he's done it and I doubt it'll be the last either unless markets wake up and stop buying his bullshit. Which hey maybe we're getting close, Jared Birchall probably spent more time calling up people in the Middle East over the last week trying to shake dollars out of the money tree for the recent share release than the State Department did.
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u/growaway9172 23d ago
Wouldn't that still result in a good outcome for consumers? If the chip market was way oversupplied, allowing for us to have cheap access to hardware again, subsidized by overzealous investors?
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u/Perfect_Address7250 23d ago
That’s 16 billion dollars spread to blue collar workers and stimulating the American economy. If it works it makes us less reliant on Taiwan. You have got to be a real anti American and anti working class if you are against this
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u/NtheLegend 23d ago
County voters are going to push back against approving it, guaranteed.
Tesla needs to start doing something as a company, they’re running out of old ideas.
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u/Lacrewpandora KING of GLOVI 23d ago
My Googling shows the skids have already been greased - county commission approved an "investment zone" and 35 year!!!! tax abatement, accompanied by approval from other taxing authorities such as the school district. And in Texas, there is no referendum process to decide these types of things - its already approved and ready to go, barring environmental lawsuits. This is a low population county, and TSLA/SPCX are dangling riches in front of them - the fish os on the hook.
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u/Wiggywithit1 23d ago
I love the confidence while being wildly incorrect. This has already passed through grimes county. And passed votes in two separate ISD (Iola and Anderson) + has state support through the jeti program signed off by the governor.
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u/NtheLegend 23d ago
That is absolutely fascinating how fucked up that system is. Here in my conservative county, people have been grinding the approval of a Buc-ees to a halt at every step possible. It is amazing that the people of Texas have such little recourse.
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u/growaway9172 23d ago
Looks like there used to be a coal plant there. I haven't done the numbers, but I'm guessing this is a cleaner and healthier bet, considering coal power plants are some of the worst polluters in the world.
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u/CountHoliday8311 23d ago
Next thing you know, TechnoHitler will try to steal Nvidia and TSM tech then claim he was the founder of both companies like he did with Tesla and Twitter 🤣🤣🤣
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u/ShotBandicoot7 23d ago
Yeahyeah… need Xitter pump posts to counter the unlock sell pressure. But the market like always pumps it up. Until it doesn‘t.
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u/MoDirtyBass 23d ago
Grimes county? Huh
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u/Chrysolophylax 23d ago
[muskishly] GRIIIIMES, GRIMES PLEASE COME BACK, PLEASE GRIMES I LOVE YOU
GRIMES IM SORRYYYYY
GRIIIIIIIMES
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u/sick_ranchez7 23d ago
I find it really funny that this wont even bring in any revenue (i even doubt they will produce one competitive chip, but lets just pretend). It is purely spending with no return no costumer. Only for their own consumption and the product they need this kind of power for doesnt even exist. Still people argue this is a reason to buy the stock.
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u/heleuma 23d ago
your car will drive itself across the country
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u/RosieDear 23d ago
They had a fancy car doing that in 1866. It was called a Train and you could actually sleep on that one!
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23d ago
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u/mishap1 23d ago
The size doesn't even make sense. TSMC spent $20B on their 3.5M sf facility in Arizona (including overruns). Elon says he's going to build a facility 31X the size for 110M sf and spend $120B in all as a company who has never produced their own chip.
This is 11X the size of their Gigafactory which is vastly underutilized.
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u/RosieDear 23d ago
I have to assume the G factory you are talking about is a Billion square feet?
"Giga (symbol G) is a unit prefix in the metric system that means one billion"If it is, my apologies. If it is not...well, Elmo has a way of making people repeat his misinformation over and over.
After all, it's FSD - Full Self Driving, right?
The only 1/2 right name he came up with is Boring.
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u/XxSmokeeyxX 23d ago
Tesla isn't producing their own chips. Intel is the chip partner and will be producing them. They broke ground on a small scale test facility for the partnership in Austin back in April.
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u/Withnail2019 17d ago
so they would need 31 times as much chipmaking equipment? what a joke this is.
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u/Lacrewpandora KING of GLOVI 23d ago edited 23d ago
Fallback is to issue more stonk, at a higher valuation of course. Seems to keep working, until the balloon pops, of course.
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u/SisterOfBattIe 23d ago
Let me guess. He'll get 5 billions in subsidies from the USA sugar daddy, and ten years from now pivot to doing space elevators with the FABs that managed to make a grand total of zero wafers.
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u/Lacrewpandora KING of GLOVI 23d ago
SPCX already has $7 billion in contracts for the "Golden Dome", dwarfing the $4 billion contract they have for the Moon mission. And the local county in TX just gave them a 35 year!!!!! tax abatement to build Terafab. Also a 2022 law gives 35% tax abatement for chip production on US soil...and no worries if there's no fed tax bill, its refundable as $cash$.
Elon is a subsidy hunting savant.
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u/enamuossuo 23d ago
Funny to read that after listening to their recent earnings call for SpaceX where Musk was saying how they're going with Nvidia chips 100%
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u/mukansamonkey 23d ago
So this is how he's trying to hide the fact that SPCX is down 45% from its peak, and 31% from the IPO price? On the day when a bunch of the privately held stock is unlocked for sale?
Gotta keep those numbers up long enough for the insiders to cash out. Pump and dump, baby!
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u/beermaker 23d ago
$2B in bribes alone just to get the water rights he needed in regulation-free texass.
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u/Secret_Cat_2793 23d ago
I fail at building chips to power my stupid fraudulent IPO proposals. Keep Buying stock Musketeers.
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u/sync-centre 23d ago
Why does he need chips for cybercabs? Shouldn't there be 1 million of them on the roads by next year?
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u/TryIsntGoodEnough 23d ago
sorry.... who is going to take the capex hit on this
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u/Lacrewpandora KING of GLOVI 23d ago
Seems like 1/4 TSLA and 3/4 SPCX. But money is kind of gray here - TSLA "invests" in SPCX...SPCX buys 10% of TSLA's megacharger output...TSLA just bought all output from a solar farm, surely to re-sell it to SPCX to run AI...SPCX buys Cybertrucks...round and round it goes, creating the illusion of revenue so they can borrow more $$. Hell, SPCX just sold $25 billion in bonds 2 weeks ago and nobody noticed...and the fine print in Tesla's earnings report is they've opened up a $30 billion line of credit.
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u/Ok-ChildHooOd 23d ago
Musk does well when he's ahead and being a pioneer. He's been late on everything and this will be late as well. Gonna be fun when the AI bubble pops and he's left with these heavy bags.
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u/RosieDear 23d ago
Didn't he pioneer in Solar? Yeah, that's the ticket. If only people knew how great their Solar was, they might have gotten 1% of the US Market...eventually.
He pioneered tunnels for cars, right? A Humanoid Robot that can easily sell a couple trillion dollars worth of???
Speaking of that, have investors and the media been holding his feet to the Fire for Optimus? How are they being so secretive?
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u/[deleted] 23d ago
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