Musk Targets 2028 for Terafab Chip Production Amid Supplier Push

The ambitious Terafab semiconductor project is targeting the third or fourth quarter of 2028 for volume chip production, a timeline Elon Musk described as highly aspirational with significant error bars. The joint venture between Tesla and SpaceX aims to manufacture one terawatt of AI computing power annually from a single facility in Gibbons Creek, Texas. Musk highlighted this aggressive schedule during a live broadcast of SpaceX's third quarter 2026 earnings call on October 20. He stated that the company is deeply appreciative of suppliers who are accelerating equipment deliveries to support this outcome.

ASML, the world's sole commercial supplier of extreme ultraviolet lithography systems, is a central partner in the project. These systems, which cost approximately $400 million each, are essential for leading edge chip production. Unofficial sources previously indicated that the first EUV tool for Terafab was slated for delivery in mid 2027. It remains uncertain whether this specific date represents the expedited timeline Musk referenced during the broadcast. The facility will utilize Intel's 14A manufacturing node technology, a process Intel officially joined the venture to co develop in April 2026.

Beyond ASML and Intel, the project relies on a broad network of equipment manufacturers. American firms such as Applied Materials, Lam Research, and KLA Corporation are providing front end processing and metrology machinery. Japanese supplier Tokyo Electron is also involved. Additionally, Tesla and SpaceX are in discussions with roughly ten South Korean equipment makers. These include Hanmi Semiconductor, known for advanced packaging, and HPSP, which manufactures high pressure hydrogen annealing equipment. Other partners are supplying specialized piping components and process valves.

Musk outlined the broader context of this expansion by citing the commercial value of the facility. He noted that if fully operational, Terafab's output could rival the GDP of the twentieth largest country in the world. For perspective, Switzerland currently holds that position with a GDP of roughly $1.14 trillion. The vertically integrated factory will handle logic, memory, and advanced packaging internally. This approach is designed to mitigate future shortages of cutting edge AI processors from external foundries like TSMC and supply chips for xAI clusters, self driving vehicles, Optimus robots, and orbital data centers.

During the same broadcast, Musk discussed near term computing goals for his AI enterprises. He expects 2.5 to 3 gigawatts of computing capacity to be active by the end of 2026. He expressed high confidence in adding another 10 gigawatts in 2027, projecting a total of 13 gigawatts of AI compute by the end of that year. To reach this milestone, SpaceX and xAI are aggressively procuring next generation NVIDIA architecture. Plans include bringing a 440,000 GPU Nvidia Vera Rubin training cluster online by the end of the second quarter of 2027.

These figures place the project in contrast with other major infrastructure efforts. The restructured 10 gigawatt Project Stargate and Meta's 5 gigawatt Hyperion project are both expected to reach full capacity in the 2030s. SpaceX intends to produce its first experimental test chip at its research fabrication facility in Austin, Texas, around the second quarter of 2027. This initial step is part of the broader rollout that will eventually lead to the main production facility in Gibbons Creek.

Industry experts have raised questions about the feasibility of the one terawatt target. Research firm Gartner estimates that total global AI optimized data center capacity is roughly 44 gigawatts as of late 2026. This represents only 4.4 percent of Terafab's planned annual output. Data from EpochAI indicates that global AI computing capacity has grown by approximately 3.3 to 3.4 times per year since 2022. Despite these comparisons, the project proceeds with the stated goal of establishing a massive internal chip supply chain.

The next steps for the venture involve finalizing agreements with the remaining South Korean partners and monitoring the delivery of critical EUV tools. The timeline for the Austin test chip in 2027 will serve as an early indicator of the project's progress. If the equipment deliveries stay on track, the team aims to have the full Gibbons Creek facility operational within the next two years.