Musk Claims Suppliers are Rushing Gear for Terafab Chip Plant
The Tesla and SpaceX joint venture aims to produce chips by 2028, a goal that experts say is incredibly ambitious.
By David Almasi ·
The number 440,000 stands out as the most striking figure from Elon Musk's recent announcement. He stated that SpaceX and xAI plan to bring a massive training cluster containing that many Nvidia "Vera Rubin" GPUs online by the end of the second quarter of 2027. This announcement was part of a broader update on the company's infrastructure goals, delivered during a live broadcast of SpaceX's third quarter earnings call on X on October 20.
Musk addressed the status of Terafab, the semiconductor manufacturing facility being built in Gibbons Creek, Texas, by Tesla and SpaceX. He said the project is targeting the start of volume chip production by the third or fourth quarter of 2028. While the timeline is aggressive, Musk acknowledged the uncertainty involved. He described the schedule as highly aspirational and noted that it carries big error bars. The company plans to manufacture its first experimental test chip at a research fabrication facility in Austin, Texas, around the second quarter of 2027.
To achieve these goals, Musk said ASML and other key suppliers are expediting equipment shipments. He expressed appreciation for these partners, who are accelerating deliveries to help meet the ambitious dates. The project is designed to be a vertically integrated factory that produces logic, memory, and advanced packaging in one location. The ultimate aim is to generate one terawatt of AI computing power per year, a capacity that Musk believes would make the single facility comparable to the GDP of a top 20 country.
The facility will utilize traditional extreme ultraviolet lithography systems. It will rely on Intel's 14A manufacturing node technology, as Intel joined the venture in April 2026 to help co-develop and refactor silicon fabrication. ASML is a critical partner because it is the only commercial supplier of the $400 million EUV lithography systems needed for leading-edge production. Reports suggest the first EUV tool for Terafab was slated for delivery in mid-2027, though it is unclear if this is the accelerated timeline Musk referenced.
Other suppliers are also involved in the project. American firms Applied Materials, Lam Research, and KLA Corporation, along with Japan's Tokyo Electron, will provide front-end processing and metrology equipment. Tesla and SpaceX are also in discussions with roughly 10 South Korean manufacturers. These include Hanmi Semiconductor for advanced packaging and HPSP for high-pressure hydrogen annealing equipment. The chips produced at Terafab are intended to supply xAI clusters, self-driving vehicles, Optimus robots, and SpaceX's orbital data centers.
Musk also outlined near-term computing capacity goals for his AI companies. He expects them to have between 2.5 and 3 gigawatts of active computing capacity by the end of 2026. He is highly confident about adding another 10 gigawatts in 2027, stating he would be surprised if they did not reach a total of 13 gigawatts by the end of that year. For comparison, the next largest project by planned capacity, Project Stargate, is expected to reach full capacity in the 2030s. Meta's Hyperion project has a similar timeline.
Despite the momentum, many experts question the validity of the one terawatt ambition. Gartner estimates that total global AI-optimized data center capacity is roughly 44 gigawatts as of late 2026. That figure represents only 4.4% of Terafab's planned output. While global AI computing capacity has grown by roughly three to three and a half times per year since 2022, according to EpochAI, the scale of Terafab remains a significant challenge. The project aims to mitigate future shortfalls of cutting-edge AI processors from external foundries like TSMC, but the timeline and capacity targets remain subjects of intense debate.
The announcement highlights the aggressive nature of current AI infrastructure planning. As companies race to secure computing power, the supply chain is under pressure. Suppliers are moving quickly to meet demand, but the sheer volume of equipment required for projects like Terafab tests the limits of the industry. The next few years will determine whether these aspirational timelines can be realized or if they will need adjustment.
