Musk Promises Gigawatt-Scale Chip Plant by 2028 as Suppliers Rush to Meet Terafab Deadlines

Elon Musk has declared that major semiconductor equipment manufacturers are accelerating deliveries to support the Terafab project, a joint venture between Tesla and SpaceX. Speaking during a live broadcast of SpaceX’s third-quarter 2026 earnings call on X on October 20, Musk confirmed that suppliers including ASML are moving equipment faster to align with the project’s aggressive construction schedule. This announcement signals a significant push to bring the facility’s infrastructure online ahead of its intended operational milestones.

The target for volume chip production at the primary Terafab facility in Gibbons Creek, Texas, is set for the third or fourth quarter of 2028. Musk emphasized that this timeline is "highly aspirational" and carries "big error bars," acknowledging the difficulty of hitting such specific dates in a complex manufacturing build-out. He expressed gratitude to ASML and other partners for their efforts to compress delivery windows, a move that is crucial for meeting the initial production goals. The project also includes a research fabrication facility in Austin, where SpaceX plans to manufacture its first experimental test chip around the second quarter of 2027.

Terafab is designed as a vertically integrated, multi-billion-dollar facility capable of producing 1 terawatt of AI computing power per year. This single building is projected to generate commercial value comparable to the GDP of a top-20 global nation, with Switzerland, ranked 20th, holding an approximate GDP of $1.14 trillion. The plant will handle the fabrication of logic, memory, and advanced packaging architectures internally, reducing reliance on external foundries. This self-sufficient model is intended to serve Musk’s xAI clusters, autonomous vehicles, Optimus humanoid robots, and SpaceX’s orbital data center, while also supplying the broader AI industry.

Intel’s involvement is central to the technical roadmap, having joined the venture in April 2026 to co-develop and refactor silicon fabrication technology. The project will utilize Intel’s 14A manufacturing node, leveraging traditional extreme ultraviolet lithography systems. ASML, the world’s only commercial supplier of the necessary $400 million EUV lithography tools, remains the most critical partner. While unofficial sources previously suggested the first EUV tool might arrive in mid-2027, it is unclear if Musk’s comments confirm this date as the new expedited delivery target.

Beyond ASML and Intel, the supply chain includes American firms Applied Materials, Lam Research, and KLA Corporation, along with Japan’s Tokyo Electron. These companies will provide front-end processing, metrology, and process control machinery. Additionally, Tesla and SpaceX are in discussions with approximately 10 South Korean equipment makers. These include Hanmi Semiconductor for advanced packaging and HPSP for high-pressure hydrogen annealing equipment, alongside suppliers of specialized piping and process valves. The coordination of these diverse vendors is essential to achieving the facility’s massive output goals.

Musk’s ambition for Terafab places it in stark contrast to other major AI infrastructure projects. For context, the restructured 10 GW Project Stargate and Meta’s 5 GW Hyperion facility are not expected to reach full capacity until the 2030s. In the interim, Musk outlined near-term goals for his AI companies, expecting 2.5 to 3 gigawatts of active computing capacity by the end of 2026. He expressed high confidence in adding another 10 GW in 2027, predicting a total of 13 GW of AI compute by year-end. To support this growth, SpaceX and xAI are aggressively procuring next-generation NVIDIA hardware, with plans to bring a 440,000-GPU Vera Rubin training cluster online by the end of the second quarter of 2027.

Despite the detailed plans, experts have raised questions about the feasibility of the 1 TW output target. Research firm Gartner estimates that total global AI-optimized data center capacity is roughly 44 GW as of late 2026. This figure represents only 4.4% of Terafab’s planned annual output. While EpochAI data shows global AI computing capacity has grown at a rate of 3.3x to 3.4x per year since 2022, the scale of Terafab’s ambition requires unprecedented acceleration in both manufacturing and deployment. The project aims to mitigate future shortfalls of cutting-edge processors, a challenge currently met by relying on external partners like TSMC.