Nasdaq premarket trading is underway, with the main session set to open at 09:30 EDT. Investors are closely monitoring the latest developments from SpaceX and Tesla, as the two companies have finalized a massive semiconductor venture in Texas.
Texas authorities have approved over $16.8 billion for the initial phase of the Terafab facility, which is expected to create 3,000 jobs. The project has secured local JETI tax incentives and a $30 million state grant, though the latter represents just 0.18% of phase-one expenditure, making it more symbolic than financially significant.
The Terafab plant, spanning 100 million square feet, aims to integrate logic, memory, packaging, and testing. It will produce AI chips for both terrestrial and space applications, supporting Tesla's robots and Cybercabs, as well as SpaceX's orbital data centers. Intel is also involved, building on a prior collaboration.
SpaceX's involvement in Tesla Energy has become more prominent, with transactions accounting for $318 million in Q2 revenue, or 10.1% of the segment's total, up from 3.6% in Q1. The implied order margin was 23.9%, higher than Tesla Energy's overall margin of 20.4%, contributing approximately 11.9% of the segment's gross profit.
The financial scale of Terafab is substantial when compared to SpaceX's balance sheet. As of June, SpaceX held $100.01 billion in cash and securities, with first-half capital expenditures of $28.48 billion. The initial phase investment of $16.8 billion represents at least 16.8% of cash holdings and 0.59 times first-half capex. A full build could reach $119 billion, exceeding SpaceX's cash position by 119%.
SpaceX's capital intensity is striking: its first-half capex of $28.48 billion was 8.2 times its operating cash flow of $3.47 billion, leaving a $25.01 billion gap to be covered by financing. The company also reported a Q2 loss of $541 million on revenue of $7.81 billion. Tesla, by contrast, had a capex-to-cash-flow ratio of 1.0, with first-half capex of $8.28 billion against operating cash flow of $8.63 billion.
Power supply remains a key hurdle. SpaceX plans to build natural-gas facilities on site, assuring residents that this will not raise ERCOT prices. The project also includes closed-loop water systems using the Gibbons Creek Reservoir rather than local groundwater.
Market reaction has been mixed. SpaceX shares ended Thursday at $114.92, up 6.1%, but remain 14.9% below their IPO price of $135. Tesla closed down 0.6% at $319.53. Analyst targets vary widely, with Morgan Stanley's Adam Jonas reiterating an Overweight rating and a $300 target, while Piper Sandler's Alexander Potter reduced his target to $140, citing lockup overhang as a valuation headwind until Summer 2027.
As construction is expected to begin in the coming months, the capital demands of Terafab will continue to be a focal point for investors in both companies.
