Musk Claims Suppliers Fast-Tracking Terafab

Elon Musk stated during a live broadcast of SpaceX’s third-quarter 2026 earnings call on October 20 that key semiconductor suppliers, including ASML, are accelerating equipment deliveries for the Terafab project. This move supports the aggressive timeline for the joint manufacturing venture between SpaceX and Tesla, which targets volume chip production at its primary Gibbons Creek, Texas facility by the third or fourth quarter of 2028. Musk described this schedule as highly aspirational, noting it carries significant uncertainty.

The Terafab initiative is a vertically integrated, multi-billion-dollar facility designed to manufacture logic, memory, and advanced packaging in a single location. It aims to produce one terawatt of AI computing power annually, a capacity Musk suggested could rival the GDP of the twentieth-largest economy, Switzerland, which stands at approximately $1.14 trillion. The project relies on Intel’s 14A manufacturing node and traditional extreme ultraviolet lithography systems to achieve its output goals.

Intel joined the venture in April 2026 to co-develop silicon fabrication technology, providing access to its 14A process. ASML, the sole commercial supplier of the required $400 million EUV lithography systems, is considered a critical partner. While unofficial sources indicated the first EUV tool was originally slated for mid-2027 delivery, it remains unclear if this date reflects the newly accelerated schedule Musk referenced. Other major suppliers include Applied Materials, Lam Research, KLA Corporation, and Tokyo Electron, which provide front-end processing and metrology equipment. Tesla and SpaceX are also in discussions with roughly ten South Korean firms, such as Hanmi Semiconductor and HPSP, for specialized components.

In addition to the Terafab announcement, Musk outlined near-term computing expansions for his AI companies. He expects 2.5 to 3 gigawatts of capacity to be active by the end of 2026. He expressed high confidence in adding another 10 gigawatts in 2027, predicting a total of 13 gigawatts of AI compute by year-end. To support this growth, 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.

The facility is intended to mitigate future shortfalls of cutting-edge AI processors from external foundries like TSMC. Chips produced at Terafab will supply Musk’s xAI clusters, self-driving vehicles, Optimus humanoid robots, and SpaceX’s orbital AI data center, alongside the broader industry. SpaceX plans to manufacture its first experimental test chip at its Austin research fabrication facility around the second quarter of 2027.

Despite the supplier commitments, industry experts have questioned the feasibility of the one-terawatt target. Gartner estimates the total global AI-optimized data center capacity at roughly 44 gigawatts as of late 2026, a fraction of Terafab’s planned output. While EpochAI data indicates global AI computing capacity has grown by 3.3 to 3.4 times annually since 2022, the scale of Terafab’s ambition remains a point of contention among analysts.

The next phase of development involves integrating the expedited equipment deliveries into the Gibbons Creek facility. As the project progresses, the success of the 2028 volume production target will depend on the sustained cooperation of global suppliers and the successful implementation of Intel’s 14A node technology within the new plant.