Musk Claims Suppliers Accelerating Terafab Shipments Amid Tight Timelines
Tesla and SpaceX aim for mass chip production by late 2028, relying on expedited deliveries from ASML and other key partners to meet their aggressive targets.
By Evelyn Henderson ·
The semiconductor industry is bracing for a surge in demand as Elon Musk details the rapid construction of Terafab, a joint venture between Tesla and SpaceX. During a live broadcast of SpaceX’s third-quarter 2026 earnings call on X on October 20, Musk announced that critical suppliers are moving faster to deliver essential equipment for this ambitious Texas-based project.
Musk stated that the facility, located in Gibbons Creek, Texas, is targeting volume chip production by the third or fourth quarter of 2028. He emphasized that these dates are "highly aspirational" and carry significant uncertainty, describing them as having "big error bars." The primary goal is to establish a vertically integrated factory capable of manufacturing logic, memory, and advanced packaging architectures in one location, ultimately aiming to produce one terawatt of AI computing power annually.
To support this rapid expansion, Musk said he is deeply appreciative of ASML and other suppliers for accelerating equipment deliveries. ASML, the sole commercial provider of the $400 million extreme ultraviolet lithography systems required for leading-edge chip production, is a pivotal partner. While unofficial sources suggested the first EUV tool was originally slated for mid-2027, it remains unclear if that represents the expedited schedule Musk referenced during the call.
The project’s scale has triggered a complex web of collaborations across the global supply chain. Beyond ASML, Terafab is working with American firms Applied Materials, Lam Research, and KLA Corporation, as well as Japan’s Tokyo Electron, for front-end processing and metrology. Additionally, Tesla and SpaceX are in discussions with approximately 10 South Korean equipment manufacturers, including Hanmi Semiconductor and HPSP, for advanced packaging and specialized components. Intel, which joined the venture in April 2026, is providing access to its 14A manufacturing node technology to co-develop the silicon fabrication process.
Musk also outlined the immediate use cases for Terafab’s output, noting that the chips will power his xAI clusters, self-driving vehicles, Optimus humanoid robots, and SpaceX’s orbital AI data center. The facility is designed to mitigate future shortfalls of cutting-edge AI processors from external foundries like TSMC. Musk claimed that once fully operational, the commercial value of the chips produced in this single building could rival the GDP of the 20th-largest country globally, a position currently held by Switzerland with a GDP of approximately $1.14 trillion.
In parallel with the hardware buildout, Musk detailed near-term ambitions for his AI companies. He expects to have 2.5 to 3 gigawatts of computing capacity active by the end of 2026. He expressed high confidence in bringing an incremental 10 gigawatts online in 2027, stating he would be surprised if they did not reach a total of 13 gigawatts of AI compute by the end of that year. To achieve this, SpaceX and xAI are aggressively procuring next-generation NVIDIA architecture, with plans to bring a 440,000-GPU "Vera Rubin" training cluster online by the end of the second quarter of 2027.
However, experts remain skeptical of the sheer scale of the Terafab project. Gartner estimates the total global AI-optimized data center capacity at roughly 44 gigawatts as of late 2026, meaning Terafab’s single-terawatt annual output target is vastly larger than the current global total. While EpochAI notes that global AI computing capacity has grown by roughly 3.3 to 3.4 times per year since 2022, the gap between current infrastructure and Musk’s goals remains a significant open question for industry analysts.
The announcement highlights the intense competition for equipment capacity in a market where suppliers like ASML have historically faced long backlogs. Whether the expedited shipments Musk described represent a fundamental shift in supply chain logistics or a strategic reallocation of existing resources will be a key metric to watch as Terafab moves toward its early 2027 experimental test chip milestone in Austin, Texas.
Source: Tom's Hardware · original report published
