Musk Claims Suppliers Accelerate Terafab Shipments for 2028 Chip Target
The Tesla-SpaceX joint venture aims to produce 1 terawatt of AI compute annually, though the timeline is described as highly aggressive.
By Juan Gonzalez ·
Elon Musk announced on October 20 that key semiconductor equipment suppliers, including ASML, have moved to expedite deliveries for Terafab, a massive chip manufacturing joint venture between Tesla and SpaceX. The acceleration is intended to support an aggressive production schedule for the facility, which is located in Gibbons Creek, Texas. During a live broadcast of SpaceX’s Q3 2026 earnings call on X, Musk stated the company is targeting volume chip production at the primary site by the third or fourth quarter of 2028. He emphasized that these dates are "highly aspirational" and come with significant uncertainty, noting the timeline carries "big error bars." While the announcement focuses on the main Texas facility, SpaceX also plans to produce its first experimental test chip at a research fabrication site in Austin, Texas, around the second quarter of 2027.
The push for speed comes from a coalition of major hardware providers. Beyond ASML, the project involves American manufacturers Applied Materials, Lam Research, and KLA Corporation, which will supply front-end processing and metrology systems. Japan’s Tokyo Electron is also a partner. Additionally, Tesla and SpaceX are in negotiations with approximately ten South Korean firms, including Hanmi Semiconductor and HPSP, for specialized packaging, hydrogen annealing, and piping components. Musk expressed gratitude for these suppliers’ willingness to accelerate equipment deliveries to meet the project's ambitious goals, despite tight capacity across the broader semiconductor supply chain.
Terafab is a vertically integrated, multi-billion-dollar facility designed to manufacture 1 terawatt of AI computing power per year. The plant will handle the fabrication of logic chips, memory, and advanced packaging under one roof. To achieve this scale, the project utilizes extreme ultraviolet (EUV) lithography systems based on Intel’s 14A manufacturing node. Intel officially joined the venture in April 2026 to co-develop and refactor silicon fabrication technology. ASML, the sole commercial supplier of the $400 million EUV systems required for leading-edge production, is a critical partner in this effort. Unofficial sources previously indicated the first EUV tool was slated for delivery in mid-2027, though it remains unclear if this represents the expedited timeline Musk referenced.
The chips produced at Terafab are intended to supply Musk’s xAI computing clusters, Tesla’s self-driving vehicles, Optimus humanoid robots, and SpaceX’s planned orbital AI data center, as well as serving the wider AI industry. The facility aims to reduce dependence on external foundries like TSMC for cutting-edge processors. Musk claimed that once fully operational, the commercial value of Terafab’s output would be comparable to the GDP of a top-20 country, with Switzerland currently ranking 20th at approximately $1.14 trillion.
In the same broadcast, Musk outlined near-term goals for his AI enterprises, predicting 2.5 to 3 gigawatts of active computing capacity by the end of 2026. He expressed high confidence in adding 10 gigawatts in 2027, stating he would be surprised if the total did not reach 13 gigawatts by year-end. To support this expansion, SpaceX and xAI are procuring next-generation NVIDIA hardware, with plans to bring a 440,000-GPU "Vera Rubin" training cluster online by the second quarter of 2027. These targets exceed the timelines of other major projects, such as the 10 gigawatt Project Stargate and Meta’s 5 gigawatt Hyperion facility, both of which are expected to reach full capacity in the 2030s.
Despite the optimism surrounding the supplier commitments, industry experts have questioned the feasibility of the 1 terawatt annual output goal. Research firm Gartner estimates the total global AI-optimized data center capacity at roughly 44 gigawatts as of late 2026, meaning Terafab’s single facility would need to produce over 4.4 times the current global total. While global AI computing capacity has grown by 3.3 to 3.4 times annually since 2022, according to EpochAI, the scale of Terafab’s ambition remains a significant leap for the semiconductor industry.
Source: Tom's Hardware
