Elon Musk's SpaceX Moves into Chip Manufacturing
In June, Elon Musk's SpaceX became the world's fifth most valuable company after raising US$85.7bn in what the company calls the world's largest initial public offering, knocking Aramco's US$29.4bn IPO in 2019 from the top position.
The aerospace manufacturer operates an ecosystem that designs and launches rockets and spacecraft. It also builds Starlink, which the company describes as the world's largest satellite internet constellation.
The company is now moving into semiconductor manufacturing through the Terafab project.
According to a US Securities and Exchange Commission filing, SpaceX describes its mission as building the "systems and technologies necessary to make life multiplanetary", to "understand the true nature of the universe" and to "extend the light of consciousness to the stars".
Rocket production across multiple sites
SpaceX manufactures the Falcon 9, Falcon Heavy and Starship rockets, with production taking place at several US locations – such as California, Texas and Florida.
The company also holds contracts with the US government, with approximately one-fifth of its 2025 revenue coming from US federal government agencies, according to its S1 form filed with the SEC. These contracts span national security launches and NASA missions.
The filing states SpaceX could be the first and only company to manufacture satellites at the scale of automotive manufacturing.
The company already produces Starlink satellites at a rate that exceeds traditional aerospace manufacturing timelines. This manufacturing capability positions the company to scale production as demand for satellite internet connectivity grows across commercial and government sectors.
Graphics processing unit production plans
SpaceX has a role in Elon's Terafab project, a chip manufacturing initiative with a goal of producing one terawatt of compute hardware each year. Tesla, SpaceX and xAI operate the joint venture.
The S1 form lists "manufacturing our own GPUs" as a substantial capital expenditure item. The graphics processing unit market currently divides between NVIDIA, AMD and Intel.
Elon positions Terafab, with Intel announced as a partner, as a method to overcome supply constraints, with the AI chips it will make seen as necessary to scale compute for interplanetary travel.
SpaceX says: "We believe that the key constraints in the continued growth of AI are physical, chip manufacturing, data centre infrastructure and power generation; the future of AI will be determined by the control of the physical stack."
The company's move into chip manufacturing represents a strategic shift towards controlling more of its technology supply chain. This approach reduces dependence on external suppliers whilst potentially lowering costs for compute-intensive operations required for spacecraft navigation and satellite communications.
Supply chain and manufacturing strategy
Elon addressed his existing supply chain at the Terafab announcement in Texas, which includes Samsung, TSMC and Micron.
"We will buy all of their chips," he said. "I have said these exact words to them."
The Terafab project consolidates chipmaking stages under one roof. This vertical integration approach mirrors SpaceX's existing manufacturing philosophy across its rocket and spacecraft production facilities.
The company's integrated manufacturing strategy extends from rocket engines to satellites and now includes semiconductor production. This consolidation aims to reduce production timelines and costs whilst maintaining quality control across the supply chain.
