Elon Musk officially proclaimed plans for his Terafab project in March to build chips for Tesla, SpaceX and xAI.

Latest filings show the first phase will cost $55 billion and could scale to $119 billion for the buildout.

Ben Bajarin, a chip analyst at Creative Strategies, stated Musk is embarking on a “15-year strategy.”

Elon Musk’s plans for a huge chip manufacturing plant in East Texas will cost at least $55 billion for the first phase, and up to $119 billion if the full buildout comes to fruition.

The estimated capital investment amounts were disclosed in a public hearing notice on Wednesday in Grimes County, Texas, home of the prospective facility. The notice remarked SpaceX, which is controlled by Musk, is seeking a property tax abatement agreement from the county.

Grimes County will hold a public hearing on June 3, to consider the proposed tax breaks.

Musk, who’s also CEO of Tesla, is aiming for Terafab to be the “most epic chip-building effort ever — combining logic, memory and advanced packaging under one roof,” which now owns artificial intelligence firm xAI. Musk officially launched the project in March.

The chip complex outside Austin would be designed to manufacture chips for SpaceX, xAI and, according to a post on X last month from SpaceX Tesla, and would be jointly built by those companies. Musk commented in a post on X that xAI “will be dissolved as a separate company” and will be called SpaceXAI.

In April, Intel published it will be joining the Terafab project to help “design, fabricate, and package ultra-high-performance chips at scale.” It’s the first major outside commitment for the capital-intensive foundry side of Intel’s business, which to date has only manufactured chips for its own products.

During Tesla’s first-quarter earnings call last month, Musk commented Tesla plans to leverage Intel’s forthcoming 14A process to produce chips at the facility. Intel’s stock popped on the news and had its best month ever in April, more than doubling in value.

Intel is positioned to benefit from the ongoing AI boom as manufacturing capacity is getting harder to come by at Taiwan Semiconductor Manufacturing, where giants like Nvidia and Apple have reserved their chipmaking availability for years to come.

Ben Bajarin, a chip analyst at Creative Strategies, noted Musk is embarking on a “15-year strategy,” knowing that his companies need to control the supply chain as “it would be very, very hard for them to have any priority at TSMC.”

“You don’t just wake up one day and say, ‘I’m going to be a foundry,'” Bajarin remarked. “It’s a very mature process with constraints across the board on how these things get made.” This also touches on aspects of portfolio.

On a Tesla earnings call in January, Musk remarked key chip suppliers couldn’t possibly produce enough hardware to satisfy the automaker’s needs, and that building a Terafab was “actually also going to be very essential to ensure that we are protected against any geopolitical risks.”

Musk commented on the more recent earnings call that Tesla was “still working out the details of the Terafab deployment,” and that the business would be building a research fab at its factory in Austin, costing around $3 billion and “capable of maybe a few thousand wafers per month.”

“SpaceX is going to take care of the initial phase of the scaled up Terafab,” Musk commented on the call.

SpaceX’s financials have been coming to light ahead of a planned public offering in the coming months. The organization filed confidentially for an IPO in April, weeks after the merger with xAI valued the combined entity at $1.75 trillion.

Tesla and SpaceX didn’t immediately respond to a request for comment.

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