Musk Promises Terafab Chip Output by 2028 Despite Tight Supply Chains

Elon Musk is facing significant scrutiny over the aggressive timeline for Terafab, a joint semiconductor venture between Tesla and SpaceX. During a live broadcast of SpaceX's third-quarter earnings call on October 20, the CEO claimed that key equipment suppliers have already moved up delivery schedules to support the project. This assertion comes at a time when the global semiconductor supply chain remains under intense pressure, making the promise of expedited shipments a point of contention among industry observers.

The primary goal of Terafab is to achieve volume chip production at its main facility in Gibbons Creek, Texas, by the third or fourth quarter of 2028. Musk described this target as highly aspirational, noting that the timeline carries big error bars. He expressed gratitude to ASML and other partners for accelerating equipment deliveries to make this outcome possible. The company also plans to produce its first experimental test chip at a research fabrication facility in Austin, Texas, around the second quarter of 2027.

To support these ambitions, the project relies heavily on external partners. ASML, the world's sole commercial supplier of expensive extreme ultraviolet lithography systems, is a critical link in the chain. The first EUV tool for Terafab was reportedly scheduled for delivery in mid-2027, though it remains unclear if this aligns with the expedited timeline Musk referenced. Other major suppliers include Applied Materials, Lam Research, KLA Corporation, and Tokyo Electron, which will provide processing and control machinery. Tesla and SpaceX are also in talks with approximately ten South Korean firms for specialized components.

Intel officially joined the venture in April 2026 to help co-develop silicon fabrication technology, specifically providing access to its 14A manufacturing process. The facility is designed to be a vertically integrated factory that fabricates logic, memory, and advanced packaging in one location. Musk envisions the plant generating one terawatt of AI computing power annually, a scale he believes would place the facility within the top twenty global country GDPs by commercial value alone.

The chips produced at Terafab are intended to power Musk's xAI clusters, self-driving vehicles, Optimus robots, and SpaceX's orbital data centers. This strategy aims to reduce reliance on external foundries like TSMC. However, experts have questioned the feasibility of the one terawatt target. Research firm Gartner estimates total global AI-optimized data center capacity at roughly 44 gigawatts as of late 2026, which is only a small fraction of Terafab's planned output. Despite the skepticism, Musk remains confident in the project's ability to scale rapidly.

In addition to Terafab, Musk outlined near-term computing goals for his AI companies. He expects them to have 2.5 to 3 gigawatts of computing capacity active by the end of 2026. He is highly confident about bringing an additional 10 gigawatts online in 2027, stating he would be surprised if the total did not reach 13 gigawatts by the end of that year. To achieve this, SpaceX and xAI are aggressively procuring next-generation NVIDIA hardware, including plans for a large Vera Rubin training cluster by the end of the second quarter of 2027.