Elon Musk's SpaceX and Tesla Are Building a $16.8 Billion Chip Factory 5 Times Bigger Than Earth's Largest Building. What Does That Mean for Both Stocks?
The Terafab joint venture is set to materially benefit both businesses.
Overview
The construction of Terafab, a semiconductor manufacturing plant that's part of a joint venture among Tesla (NASDAQ: TSLA), Space Exploration Technologies (NASDAQ: SPCX), and Intel, is integral to the investment case for the two Elon Musk-run companies. Not only is the initiative critical to supporting growth, but its successful implementation will significantly improve something that's too little discussed in the investment world -- it will derisk companies' supply chains and, therefore, their risk profile. Here's why.
The Terafab initiative is massive. The first phase involves a $16.8 billion investment in a 100-million-square-foot semiconductor manufacturing plant in Grimes County, Texas. A multiphase build-out could ultimately amount to a $119 billion investment. It aims to produce 1 terawatt (TW) of compute, which is significantly larger than the current global supply, according to SpaceX.
Details
The fundamental rationale behind it is simple: Both companies need to develop and manufacture chips to support growth in their cost technologies, electric vehicles (EVs) and Optimus robots for Tesla, and AI compute and data centers for SpaceX.
Source
Originally published at www.fool.com.