May 6 - SpaceX has proposed an initial $55 billion investment to build a semiconductor manufacturing facility in Texas, according to a filing made public on Wednesday.
Tesla (TSLA.O), opens new tab chief Elon Musk has said the electric vehicle maker plans to use Intel's (INTC.O), opens new tab next-generation 14A manufacturing process to make chips at its Terafab project, an advanced artificial-intelligence chip complex Musk has envisioned in Texas.
WHAT IS THE TERAFAB PROJECT?
Musk's SpaceX, its xAI unit and Tesla will build two advanced chip factories at a sprawling facility in Austin, one to be used in Tesla vehicles and Optimus humanoid robots, and another designed for AI data centers in space.
"We either build the Terafab or we don't have the chips," Musk had said during a presentation in Austin in March, adding that current global chip production would meet only a small fraction of his companies' future needs.
Musk said he was grateful to existing chip suppliers, naming Samsung (005930.KS), opens new tab, TSMC (2330.TW), opens new tab and Micron (MU.O), opens new tab, but said demand from his companies would eventually exceed total global chip output.
He did not give a timeline for the project and has a track record of announcing highly ambitious projects, though several have faced delays or fallen away. SpaceX said in the filing there is no assurance it will meet its Terafab objectives within expected timelines, or at all.
Intel announced it would join the project in April, bringing established chip manufacturing expertise to the venture.
LOCATION AND SCALE
Musk has said the Terafab will handle each step of chip production, including the design. The facility is planned in Grimes County within a newly designated reinvestment zone, where local officials are expected to consider a property tax abatement agreement at a June meeting.
On Tesla's earnings call in April, Musk said that the details of the Terafab deployment are still being worked out.
In the near term, Tesla will be building the research fab on its Giga Texas campus in the Austin area. The initiative is expected to cost about $3 billion and "capable of maybe a few thousand wafers per month, but it's really intended to try out ideas," Musk said.
"What we figured out thus far is Tesla doing the research fab, SpaceX doing the initial part of the large-scale Terafab. And then we got to figure out the rest," he said.
The company estimates total investment for the Texas semiconductor manufacturing facility could rise to $119 billion if additional phases are completed.
Terafab will eventually produce one terawatt of computing capacity a year, compared with about half a terawatt currently generated across the United States, Musk had said in March.
Building enough chip capacity to power one terawatt of annual compute would cost between $5 trillion and $13 trillion in capital expenditure, according to Bernstein estimates.
TECHNOLOGY
Tesla plans to use Intel's 14A manufacturing process to make chips at the Terafab project. The contract would mark Intel's first major customer for the technology, a breakthrough for the chipmaker which has struggled to stand up its contract manufacturing business essential for taking on top rival TSMC.
Musk said that by the time Terafab scales up, Intel's 14A manufacturing process "will be probably fairly mature or ready for prime time" and "seems like the right move."
Musk's staff have reached out to chip industry suppliers, including Applied Materials (AMAT.O), opens new tab, Tokyo Electron (8035.T), opens new tab and Lam Research (LRCX.O), opens new tab, and Samsung for the Terafab project, according to Bloomberg.
Staff have sought price quotes and delivery times for an array of chipmaking gear, Bloomberg reported in April, adding that in the past few weeks, they have contacted makers of photomasks, substrates, etchers, depositors, cleaning devices, testers and other tools.
Reuters reported that SpaceX is planning to make its own graphics processing units, or GPUs, the chips at the heart of training AI models.
THE "UNKNOWNS"
Though Musk has said Terafab would target chips for cars, humanoid robots and space-based data centers, many details are unknown, such as:
Who will pay for pricey chipmaking equipment
Who will operate the factory
When it will come online
Elon Musk lays out Terafab AI chip project plan
SpaceX has proposed an initial $55 billion investment to build a semiconductor manufacturing facility in Texas, according to a filing made public on Wednesday.
www.reuters.com
SpaceX files plan for $55 billion Terafab chip facility in Texas
Elon Musk's SpaceX has proposed an initial investment of $55 billion to build a semiconductor manufacturing facility, called Terafab, in Texas, according to a filing made public on Wednesday.
www.reuters.com
