Musk Targets 2028 for Terafab Chip Output

The race to build a one-terawatt chip factory in Texas just got faster.

Elon Musk announced on October 20 that major semiconductor equipment suppliers, including ASML, are moving up their delivery schedules for Terafab. This joint venture between Tesla and SpaceX aims to produce volume chips by the third or fourth quarter of 2028. Musk described the timeline as highly aspirational, noting it comes with significant error bars. He expressed gratitude to suppliers for accelerating equipment deliveries to help meet these aggressive targets. The primary facility is located in Gibbons Creek, Texas.

The project has been taking shape over the last few months. Intel officially joined the venture in April 2026 to co-develop silicon fabrication technology. This partnership grants Terafab access to Intel’s 14A manufacturing node. The factory plans to use traditional extreme ultraviolet lithography systems. ASML, the sole commercial supplier of these high-value machines, is a critical partner in this effort. Unofficial sources previously suggested the first EUV tool was slated for mid-2027, though it remains unclear if that date has shifted due to the recent expedited shipments.

The supply chain for this massive undertaking is extensive. In addition to ASML and Intel, Terafab is working with American firms like Applied Materials, Lam Research, and KLA Corporation. Japanese company Tokyo Electron is also part of the network. These providers supply front-end processing, metrology, and process control machinery. Tesla and SpaceX are also in talks with approximately ten South Korean equipment makers. These include Hanmi Semiconductor for advanced packaging and HPSP for high-pressure hydrogen annealing equipment.

The facility is designed to be vertically integrated, manufacturing logic, memory, and advanced packaging in one location. The goal is to mitigate future shortages of cutting-edge AI processors from external foundries like TSMC. The chips produced here will power xAI clusters, self-driving vehicles, Optimus humanoid robots, and SpaceX’s orbital AI data center. Musk stated that once fully operational, the commercial value of the output could rival the GDP of a top-20 global country from a single building.

Musk also shared updates on his AI computing infrastructure during the same broadcast. He expects his AI companies to have 2.5 to 3 gigawatts of active computing capacity by the end of 2026. He expressed high confidence in adding another 10 gigawatts in 2027. This would bring the total to 13 gigawatts by the end of next year. To achieve this, SpaceX and xAI are aggressively procuring next-generation NVIDIA architecture. A cluster of 440,000 Nvidia Vera Rubin GPUs is planned to be online by the end of Q2 2027.

The scale of these plans dwarfs current industry standards. For context, research firm Gartner estimates total global AI-optimized data center capacity at roughly 44 gigawatts as of late 2026. This represents only 4.4% of Terafab’s planned one-terawatt output. Other major projects, such as the restructured 10 gigawatt Project Stargate and Meta’s 5 gigawatt Hyperion, are expected to reach full capacity in the 2030s. While global AI computing capacity has grown by roughly 3.3 to 3.4 times per year since 2022, experts remain skeptical about the feasibility of Terafab’s ambitious 1-terawatt target.

The next step is clear for the Austin-based research fabrication facility. SpaceX plans to manufacture its first experimental test chip there around the second quarter of 2027. This milestone will serve as a precursor to the larger Gibbons Creek production run. The industry will be watching closely to see if the expedited equipment deliveries can bridge the gap between current capacity and the aggressive 2028 deadline.