Musk Sets 2028 Target for Terafab Chip Production Amid Accelerated Supplier Deals

Elon Musk announced that ASML and other critical semiconductor equipment suppliers have agreed to expedite shipments for the Terafab project, aiming to support an aggressive timeline for the joint venture between Tesla and SpaceX. The announcement was made during a live broadcast of SpaceX's third-quarter 2026 earnings call on X on October 20. Musk stated that the company targets volume chip production at the primary facility in Gibbons Creek, Texas, by the third or fourth quarter of 2028. He emphasized that this schedule is highly aspirational and comes with significant uncertainty. The CEO of both partner companies expressed deep appreciation for the suppliers accelerating their equipment deliveries to help achieve this outcome.

SpaceX plans to manufacture its first experimental test chip at its research fabrication facility in Austin, Texas, around the second quarter of 2027. This step serves as a precursor to the larger operations planned for the Gibbons Creek site. The broader Terafab initiative is a multi-billion-dollar, vertically integrated chip factory designed to manufacture one terawatt of AI computing power annually. The facility will handle logic, memory, and advanced packaging in a single location, aiming to mitigate future shortfalls of cutting-edge AI processors from external foundries such as TSMC. These chips are intended to power xAI clusters, self-driving vehicles, Optimus humanoid robots, and SpaceX’s orbital AI data center.

In the same broadcast, Musk outlined near-term ambitions for his AI enterprises. He expects the companies to have 2.5 to 3 gigawatts of computing capacity active by the end of 2026. He expressed high confidence in bringing an additional 10 gigawatts online in 2027, suggesting a total of 13 gigawatts by the end of that year. To achieve this milestone, SpaceX and xAI are aggressively procuring next-generation NVIDIA architecture. Musk announced plans to get a massive 440,000-GPU Nvidia Vera Rubin training cluster online by the end of the second quarter of 2027.

The scale of Terafab has mandated various collaborations across the semiconductor supply chain. The facility will utilize traditional extreme ultraviolet lithography systems based on Intel’s 14A manufacturing node technology. Intel officially joined the Terafab venture in April 2026 to help co-develop and refactor silicon fabrication technology, providing access to its state-of-the-art 14A process. ASML, the world’s sole commercial supplier of the $400 million EUV lithography systems required for high-volume leading-edge chip production, is considered the project’s most critical partner. Unofficial sources indicated that Terafab’s first EUV tool was slated for delivery in mid-2027, though it remains unclear if this aligns with the expedited timeline Musk described.

Other major suppliers include American equipment manufacturers Applied Materials, Lam Research, and KLA Corporation, as well as Japan’s Tokyo Electron. These companies will provide front-end processing, metrology, and process control machinery. Tesla and SpaceX are also in talks with approximately 10 South Korean equipment makers, including Hanmi Semiconductor for advanced packaging and HPSP for high-pressure hydrogen annealing equipment. Additional negotiations involve firms providing specialized piping components and process valves. Musk’s announcement highlights that several of these suppliers are expediting supply to Terafab, even as capacity remains tight across the broader semiconductor industry.

Musk boasted that once fully scaled and operational, the commercial value of Terafab’s advanced chip output would place the single physical building within the top 20 global country GDPs. For context, Switzerland, currently the 20th largest economy, has a GDP of approximately $1.14 trillion. However, many experts have questioned the validity of the one terawatt ambition. Research firm Gartner estimates the total global AI-optimized data center capacity is roughly 44 gigawatts as of late 2026, which is only 4.4% of Terafab’s planned output. According to EpochAI, global AI computing capacity has grown by roughly 3.3 to 3.4 times per year since 2022, yet the gap between current global capacity and Terafab’s target remains vast.