SpaceX could spend about $135 billion on wafer-fab equipment over the next five years, UBS says
UBS initiated coverage of SpaceX's stock with a buy rating on Tuesday.
Elon Musk is preparing to spend billions of dollars to bring his chip-making vision to life, and that could double the size of one corner of the semiconductor market, according to UBS.
UBS is guiding for SpaceX's $(SPCX)$ artificial-intelligence-focused business to devote about $1.1 trillion toward capital expenditures over the next five years, analyst Tim Arcuri said in a Tuesday note, after his colleague John Hodulik initiated coverage of the stock Tuesday with a buy rating.
About 20% of that amount will likely go toward the Terafab, according to Arcuri, referring to the facility where Musk plans to manufacture chips for SpaceX and Tesla. And "assuming the typical 60% capex split" for wafer-fab equipment, that could mean SpaceX will put $135 billion toward chip-making tools over the next five years - close to the current size of the global total addressable market for wafer-fab equipment, Arcuri added.
Even if only a portion of that projected spending materializes, Arcuri said it would support his "long-held conviction that industry WFE could approach" about $300 billion by 2029.
Musk's Terafab would likely include a mask shop, a leading-edge process for logic and memory chips and chip packaging and testing, Arcuri said.
Companies including KLA $(KLAC)$ and Applied Materials $(AMAT)$ make inspection and metrology equipment that is used to check photomasks for defects and accuracy. Lam Research $(LRCX)$ and Teradyne $(TER)$ also make chip-manufacturing and -testing equipment.
SpaceX has placed orders for chip-making equipment in the range of $5 billion for a pilot line next year, Arcuri said, citing conversations with suppliers. Arcuri expects that spending to grow to $10 billion in 2028, which could put the Terafab on the path to doling out more than $50 billion a year for wafer-fab equipment by 2030 or 2031.
At that rate, Musk's chip-making venture would be growing at the same rate as Taiwan Semiconductor Manufacturing Co. $(TSM)$ (TW:2330) in terms of spending on wafer-fab equipment in the next four to five years, Arcuri said. TSMC builds a majority of the world's advanced chips.
That would be "a huge game changer for how high" the market for wafer-fab equipment can grow, Arcuri said, adding that he expects that question "to be a major theme" in upcoming earnings seasons as construction on the Terafab gets under way.
-Britney Nguyen
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 07, 2026 15:05 ET (19:05 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments