Musk pledges to rush Terafab chip production to Texas by 2028

The race to build the world's largest AI chip factory is accelerating in Texas.

Elon Musk revealed during a live broadcast of SpaceX's third-quarter earnings call that key semiconductor equipment suppliers, including ASML, are moving faster to deliver tools for the Terafab project. This joint venture between Tesla and SpaceX targets the start of volume chip production at its primary facility in Gibbons Creek, Texas, by the third or fourth quarter of 2028. Musk described this schedule as highly aspirational, noting that it carries significant uncertainty or big error bars. He expressed deep appreciation for the suppliers who are accelerating their delivery schedules to meet these aggressive goals.

The project involves a two-stage approach to manufacturing. SpaceX plans to produce its first experimental test chip at a research fabrication facility in Austin, Texas, around the second quarter of 2027. This initial step will pave the way for the main production line in Gibbons Creek. The facility is designed as a vertically integrated plant capable of manufacturing logic, memory, and advanced packaging components in a single location. The ultimate goal is to fabricate one terawatt of AI computing power annually, a scale that would make the facility's commercial output comparable to the GDP of a top 20 global economy. For perspective, Switzerland, currently ranked 20th, has a GDP of approximately $1.14 trillion.

Musk also outlined broader computing ambitions for his AI ventures during the same broadcast. He expects to have between 2.5 and 3 gigawatts of computing capacity active by the end of this year. He is highly confident in adding another 10 gigawatts in 2027, which would bring the total to 13 gigawatts. To achieve this, SpaceX and xAI are aggressively procuring next-generation NVIDIA architecture. Specifically, the companies plan to bring a 440,000-GPU Nvidia Vera Rubin training cluster online by the end of the second quarter of 2027. This expansion is intended to support xAI clusters, self-driving vehicles, Optimus humanoid robots, and SpaceX's orbital AI data center.

The supply chain for Terafab is complex and involves major global players. Intel joined the venture in April 2026 to co-develop silicon fabrication technology using its 14A manufacturing node. ASML, the sole commercial supplier of extreme ultraviolet lithography systems, is considered the most critical partner. Unofficial sources suggest the first EUV tool was slated for mid-2027 delivery, though it is unclear if this reflects the newly expedited timeline. Other major contributors include Applied Materials, Lam Research, KLA Corporation, and Tokyo Electron, which provide front-end processing and metrology equipment. Tesla and SpaceX are also in negotiations with about 10 South Korean firms, including Hanmi Semiconductor and HPSP, for specialized packaging and process control machinery.

Despite the momentum, industry experts remain skeptical of the one-terawatt output target. Gartner estimates that total global AI-optimized data center capacity stands at roughly 44 gigawatts as of late 2026. This means Terafab's planned output would be more than 20 times the current global total. While EpochAI notes that global AI computing capacity has grown by 3.3 to 3.4 times annually since 2022, the sheer scale of Terafab's ambition continues to draw questions from analysts. The project aims to mitigate future shortfalls of cutting-edge processors from external foundries like TSMC, securing a critical supply for Musk's various technological initiatives.