Musk: Suppliers Rushing Ahead for Terafab Chip Plant

Elon Musk says equipment makers are accelerating deliveries for the upcoming Terafab manufacturing facility, a joint project between Tesla and SpaceX. This push is intended to support a tight schedule for the plant's development. The statement was made during a live broadcast of SpaceX's earnings call on October 20, 2026.

Musk outlined a target for the primary facility in Gibbons Creek, Texas, to begin volume chip production by the third or fourth quarter of 2028. He acknowledged the speed required, calling the dates "very aggressive" and stating, "we're very appreciative of ASML and all of our other suppliers in accelerating equipment deliveries in order to achieve this outcome." Musk, who is CEO of both companies, also stated that SpaceX plans to produce its first experimental test chip at a research fabrication facility in Austin, Texas, around the second quarter of 2027.

The project is a multi-billion-dollar, vertically integrated factory in Texas designed to produce logic, memory, and advanced packaging architectures under one roof. Its goal is to manufacture 1 terawatt (TW) of AI computing power annually. To do this, Terafab will use extreme ultraviolet (EUV) lithography systems that rely on Intel's 14A manufacturing process. Intel joined the venture in April 2026 to help develop this technology. ASML, the sole commercial supplier of the $400 million EUV machines, is a key partner for the facility, along with other equipment manufacturers such as Applied Materials, Lam Research, KLA Corporation, and Tokyo Electron.

Once operational, the facility is intended to supply chips for xAI's AI clusters, Tesla's self-driving vehicles and Optimus robots, SpaceX's orbital AI data center, and the wider AI industry. The plan is to mitigate potential future shortfalls of advanced AI processors from external foundries like TSMC. The announcement regarding expedited deliveries comes as capacity remains constrained across the semiconductor supply chain.

Despite these efforts, the project's timeline remains highly aspirational and carries "big error bars," as Musk stated. The facility's planned output of 1 TW of annual AI compute is a target that many experts have questioned. For context, research firm Gartner estimates total global AI-optimized data center capacity at roughly 44 GW as of late 2026, which is 4.4% of Terafab's planned annual output. The first EUV tool for Terafab was reportedly slated for delivery in mid-2027, but it remains unclear if this is the expedited timeline Musk referred to in the broadcast.