Musk claims Terafab chip plant will hit production by 2028 despite supply chain doubts

For consumers and investors tracking the cost of artificial intelligence hardware, a new timeline has emerged for the Terafab semiconductor project. Elon Musk announced that the joint venture between Tesla and SpaceX is targeting the start of volume chip production at its primary facility in Gibbons Creek, Texas, by the third or fourth quarter of 2028. While Musk described this schedule as "highly aspirational" with "big error bars," the announcement signals an attempt to bring massive computing power in-house rather than relying on external foundries.

During a live broadcast of SpaceX’s Q3 2026 earnings call on October 20, Musk stated that critical suppliers, including ASML, have expedited equipment shipments to support this aggressive goal. The facility aims to produce logic, memory, and advanced packaging in a single, vertically integrated location. Musk claimed that once fully operational, the commercial value of the output from this single building would rival the GDP of the top 20 global countries, a figure that places it near Switzerland’s economic output.

The project relies heavily on existing industry standards to achieve its scale. Terafab will utilize Intel’s 14A manufacturing node technology and extreme ultraviolet lithography systems provided by ASML, the sole commercial supplier of these high-end tools. Intel officially joined the venture in April 2026 to help refactor silicon fabrication technology. Other major partners include American firms like Applied Materials, Lam Research, and KLA Corporation, as well as Japan’s Tokyo Electron, which will supply front-end processing and metrology machinery. Tesla and SpaceX are also in discussions with approximately 10 South Korean equipment makers, including Hanmi Semiconductor and HPSP.

Reactions to the timeline vary between internal confidence and external skepticism. Musk expressed strong belief in the project’s trajectory, noting that the first experimental test chip is expected from SpaceX’s research fab in Austin by Q2 2027. However, industry experts have questioned whether a single facility can realistically handle the planned output of 1 terawatt of AI computing power per year. Research firm Gartner estimates total global AI-optimized data center capacity at roughly 44 gigawatts as of late 2026, meaning Terafab’s target would exceed current global totals by a significant margin.

The push for Terafab is part of a broader push to secure compute resources for Musk’s various ventures, including xAI clusters, self-driving vehicles, Optimus robots, and orbital data centers. To support this, SpaceX and xAI are procuring next-generation NVIDIA architecture, with plans to bring a 440,000-GPU "Vera Rubin" training cluster online by the end of Q2 2027. Musk also stated he expects his AI companies to have 2.5 to 3 gigawatts of capacity active by the end of 2026, with high confidence in reaching 13 gigawatts by the end of 2027.

The next step for the project involves the delivery of the first EUV lithography tool, which unofficial sources suggest is slated for mid-2027. It remains unclear if this date reflects the expedited timeline Musk referenced. As the facility moves from planning to construction, the success of Terafab will depend on whether the supply chain can maintain its pace without significant bottlenecks, potentially reshaping the global landscape of semiconductor manufacturing.