Musk claims ASML is rushing chip gear for Terafab

1.14 trillion dollars. That is the approximate Gross Domestic Product of Switzerland, the twentieth-largest economy in the world. Elon Musk claims that when his new chip factory is fully operational, its commercial value will rival that of an entire nation from a single physical building. He made this bold assertion during a live broadcast of SpaceX's third-quarter 2026 earnings call on X on October 20.

The facility in question is Terafab, a massive joint megaproject between Tesla and SpaceX. Located in Gibbons Creek, Texas, the plant is designed to be a vertically integrated manufacturing hub. It will handle the fabrication of logic chips, memory, and advanced packaging under one roof. The ultimate goal is staggering: to produce one terawatt of AI computing power per year. Musk stated that the company targets volume chip production at this primary site by the third or fourth quarter of 2028. He admitted the timeline is "highly aspirational" and carries "big error bars."

To meet these aggressive dates, Musk said that critical equipment suppliers have accelerated their shipments. He specifically highlighted ASML, the world's sole commercial supplier of extreme ultraviolet lithography systems. These machines cost approximately $400 million each and are essential for high-volume, leading-edge chip production. "These are very aggressive dates, and we're very appreciative of ASML and all of our other suppliers in accelerating equipment deliveries in order to achieve this outcome," Musk said during the call. Unofficial sources suggest the first EUV tool was originally slated for delivery in mid-2027, though it remains unclear if that is the expedited date Musk referenced.

The project relies on a complex web of collaborations across the semiconductor supply chain. Intel officially joined the venture in April 2026 to help co-develop silicon fabrication technology. Terafab will utilize Intel's 14A manufacturing node technology, which relies on traditional extreme ultraviolet lithography systems. Beyond Intel and ASML, the project involves American equipment makers Applied Materials, Lam Research, and KLA Corporation. Tokyo Electron from Japan is also a major partner. These firms will provide front-end processing, metrology, and process control machinery. Additionally, Tesla and SpaceX are in talks with about ten South Korean equipment makers, including Hanmi Semiconductor and HPSP.

The chips produced at Terafab will serve a wide range of applications. They are intended to power Musk's xAI computing clusters, Tesla's self-driving vehicles, Optimus humanoid robots, and SpaceX's planned orbital AI data center. The facility is also designed to supply the broader AI industry, aiming to mitigate future shortfalls of cutting-edge AI processors from external foundries like TSMC. SpaceX plans to manufacture its first experimental test chip at its research fabrication facility in Austin, Texas, around the second quarter of 2027.

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 stated he is highly confident about bringing an incremental 10 gigawatts online in 2027. Musk said he "would be surprised" if they do not hit a total of 13 gigawatts of AI compute by the end of 2027. To achieve this, SpaceX and xAI are aggressively procuring the upcoming next-generation NVIDIA architecture, with plans to get a 440,000-GPU Nvidia "Vera Rubin" training cluster online by the end of the second quarter of 2027.

For context, other major projects have different timelines. The restructured 10 gigawatt Project Stargate is expected to reach full capacity in the 2030s. Meta's 5 gigawatt Hyperion project has a similar timeline. While these are significant, Musk's Terafab ambition stands out for its scale. The facility is a planned multi-billion-dollar investment that aims to redefine the landscape of AI infrastructure.

However, experts have questioned the validity of the one-terawatt target. Research firm Gartner estimates the total global AI-optimized data center capacity is roughly 44 gigawatts as of late 2026. This figure represents just 4.4 percent of Terafab's planned annual output. According to EpochAI, global AI computing capacity has grown by roughly 3.3 to 3.4 times per year since 2022. While the growth is rapid, the gap between current global capacity and Musk's single-factory goal remains vast.

The next steps for the project involve navigating the tight capacity across the semiconductor supply chain. Several suppliers are expediting deliveries to keep the timeline on track, even as the industry faces resource constraints. The success of Terafab will hinge on whether these aggressive timelines hold up under the pressure of manufacturing one of the most ambitious industrial projects ever attempted in the United States.