Musk claims Terafab chip output could rival top 20 national economies

Elon Musk announced on October 20 that key semiconductor equipment suppliers have agreed to accelerate delivery schedules for the Terafab manufacturing complex. The update comes as the joint venture between Tesla and SpaceX moves to secure the hardware necessary for an aggressive production timeline. Musk stated during a live broadcast of SpaceX's third quarter earnings call that these expedited shipments are critical to meeting the project's initial milestones.

The primary target for volume chip production at the Gibbons Creek, Texas facility is the third or fourth quarter of 2028. Musk described this schedule as highly aspirational, noting that it carries significant uncertainty. He emphasized the aggressive nature of these dates while expressing gratitude to partners for moving equipment forward. The company also aims to produce its first experimental test chip at a separate research fabrication facility in Austin, Texas, around the second quarter of 2027.

Musk, who serves as CEO for both parent companies, highlighted the commercial scale of the project. He suggested that the output from a single physical building could generate economic value comparable to the top 20 global economies. For context, Switzerland currently holds the 20th position on that list with a gross domestic product of approximately $1.14 trillion. Terafab is designed as a vertically integrated factory intended to manufacture 1 terawatt of AI computing power per year.

The facility will handle logic, memory, and advanced packaging internally to reduce reliance on external foundries. This strategy aims to mitigate future shortages of cutting edge AI processors. The chips produced at Terafab are intended for Musk's xAI clusters, self driving vehicles, Optimus humanoid robots, and SpaceX's orbital AI data center. The broader AI industry is also expected to benefit from the increased supply.

Intel officially joined the venture in April 2026 to co develop silicon fabrication technology. The project will utilize Intel's 14A manufacturing node with traditional extreme ultraviolet lithography systems. ASML, the world's only commercial supplier of the $400 million EUV machines required for leading edge production, remains a critical partner. Unofficial sources previously indicated that the first EUV tool for Terafab was slated for delivery in mid 2027, though it remains unclear if this matches the expedited timeline Musk referenced.

Other major suppliers include 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. Tesla and SpaceX are also in discussions with approximately 10 South Korean equipment makers. These partners include Hanmi Semiconductor for advanced packaging and HPSP for high pressure hydrogen annealing, alongside firms supplying specialized piping and valves.

Musk also outlined near term ambitions for his AI companies during the same broadcast. He expects them to have 2.5 to 3 gigawatts of computing capacity active by the end of 2026. He expressed high confidence in adding another 10 gigawatts in 2027, stating he would be surprised if they did not reach a total of 13 gigawatts of AI compute by the end of that year. This goal is being supported by the aggressive procurement of next generation NVIDIA architecture.

To achieve this milestone, SpaceX and xAI plan to bring a 440,000 GPU Nvidia Vera Rubin training cluster online by the end of the second quarter of 2027. This expansion contrasts with other major projects. The restructured 10 gigawatt Project Stargate is not expected to reach full capacity until the 2030s. Meta's 5 gigawatt Hyperion project has a similar long term timeline.

Experts have raised questions about the feasibility of the 1 terawatt target. Research firm Gartner estimates that total global AI optimized data center capacity is roughly 44 gigawatts as of late 2026. This figure represents only 4.4 percent of Terafab's planned output. While global AI computing capacity has grown by 3.3 to 3.4 times per year since 2022, the sheer scale of the Terafab ambition remains a point of discussion in the industry.