Musk promises faster chip equipment delivery for new Texas factory

Elon Musk announced on October 20 that major semiconductor equipment makers are speeding up deliveries for the Terafab project, a massive chip manufacturing plant jointly developed by Tesla and SpaceX. Speaking during a live broadcast of SpaceX's third quarter earnings call on the platform X, Musk confirmed that the facility in Gibbons Creek, Texas, targets volume production by the third or fourth quarter of 2028. He described the timeline as highly aspirational, noting that it carries significant uncertainty.

Musk expressed gratitude to ASML and other suppliers for accelerating equipment deliveries to meet these ambitious dates. The project represents a major step in vertical integration, aiming to manufacture logic, memory, and advanced packaging in a single location. Once fully operational, the facility is designed to produce one terawatt of AI computing power per year. Musk suggested that the commercial value of this output could rival the GDP of a top twenty global nation.

The venture relies heavily on advanced manufacturing technology. Terafab will use extreme ultraviolet lithography systems based on Intel's 14A node. Intel officially joined the project in April 2026 to help refine silicon fabrication techniques. ASML, the sole commercial provider of the necessary EUV machines, remains a critical partner. While unofficial sources indicated the first EUV tool was originally slated for mid-2027, it is unclear if that date has been moved up under the new expedited schedule.

Beyond the primary factory, SpaceX plans to produce its first experimental test chip at a research facility in Austin, Texas, around the second quarter of 2027. This early step will help validate the manufacturing process before the main plant in Gibbons Creek begins full scale operations. The project involves a complex supply chain with multiple international partners working to meet the tight deadlines.

Other key suppliers include American firms Applied Materials, Lam Research, and KLA Corporation, as well as Japan's Tokyo Electron. These companies provide essential front end processing and metrology machinery. Tesla and SpaceX are also in discussions with roughly ten South Korean manufacturers. These firms specialize in areas such as advanced packaging, high pressure hydrogen annealing, and specialized piping components.

The chips produced at Terafab are intended for a wide range of applications. They will power xAI's computing clusters, Tesla's self driving vehicles, Optimus humanoid robots, and SpaceX's planned orbital data center. The facility aims to reduce dependence on external foundries like TSMC, which currently supply much of the global AI chip market. This internal production capability is expected to support the broader growth of the AI industry.

Musk also outlined related computing goals during the same broadcast. He stated that his AI companies expect to have between 2.5 and 3 gigawatts of capacity active by the end of 2026. He expressed strong confidence in adding another 10 gigawatts in 2027, aiming for a total of 13 gigawatts. To achieve this, SpaceX and xAI are procuring next generation NVIDIA hardware, including a large training cluster expected to be online by the end of the second quarter of 2027.

Despite the detailed plans, experts have raised questions about the scale of the project. Research firm Gartner estimates that total global AI data center capacity is roughly 44 gigawatts as of late 2026. This figure represents only a small fraction of Terafab's planned one terawatt output. The rapid growth in global AI computing capacity in recent years provides some context for the expansion, but the proposed scale remains a significant leap from current industry standards.