Musk Claims Chip Giant Will Hit Production by 2028

The semiconductor industry is already stretched thin, but Elon Musk says his latest mega-project is moving faster than the rest. During a live broadcast of SpaceX’s third-quarter earnings call on X on October 20, Musk announced that key suppliers are rushing to deliver equipment for Terafab, the joint chip-making venture between Tesla and SpaceX.

Musk stated that the company aims to begin volume chip production at the primary facility in Gibbons Creek, Texas, by the third or fourth quarter of 2028. He emphasized that this timeline is "highly aspirational" and comes with "big error bars," acknowledging the aggressive nature of the dates. The announcement highlights a push to secure critical hardware from major industry players to support this ambitious schedule.

To support this timeline, Musk said the team is deeply appreciative of ASML and other suppliers for accelerating equipment deliveries. ASML is a critical partner because it is the world's only commercial supplier of the extreme ultraviolet (EUV) lithography systems needed for leading-edge chip production. While unofficial sources previously indicated the first EUV tool was slated for mid-2027, it remains unclear if that is the expedited schedule Musk referenced in the broadcast.

Beyond the main Texas facility, SpaceX plans to manufacture its first experimental test chip at a research fab in Austin around the second quarter of 2027. The Gibbons Creek site is designed to be a vertically integrated factory that will fabricate logic, memory, and advanced packaging in one place. The project utilizes Intel’s 14A manufacturing node technology, with Intel officially joining the venture in April 2026 to help co-develop the silicon fabrication technology.

The project relies on a vast network of other suppliers, including American firms Applied Materials, Lam Research, and KLA Corporation, as well as Japan’s Tokyo Electron for front-end processing and metrology. Tesla and SpaceX are also in talks with approximately ten South Korean equipment makers, including Hanmi Semiconductor and HPSP, which provide specialized packaging and annealing equipment. This broad collaboration is necessary to build the infrastructure required for the facility’s massive output goals.

Musk outlined the commercial scale of Terafab, claiming that once fully operational, the facility’s chip output would place it within the top 20 global country GDPs from a single building. For context, Switzerland currently holds the 20th spot with a GDP of roughly $1.14 trillion. The ultimate goal is to manufacture one terawatt of AI computing power per year, a figure that would supply chips for xAI clusters, self-driving vehicles, Optimus robots, and SpaceX’s orbital data centers.

However, experts have questioned the feasibility of the one-terawatt target. Research firm Gartner estimates that total global AI-optimized data center capacity is only about 44 gigawatts as of late 2026, which is just 4.4% of Terafab’s planned annual output. While global AI capacity has grown rapidly in recent years, the gap between current infrastructure and Terafab’s ambition remains significant.

In related news, Musk also discussed near-term computing capacity for his AI companies, expecting 2.5 to 3 gigawatts to be active by the end of 2026. He expressed high confidence in adding 10 more gigawatts in 2027, aiming for a total of 13 gigawatts by year's end. This will involve deploying a 440,000-GPU Nvidia "Vera Rubin" training cluster by the end of the second quarter of 2027.