Texas Chip Giant: Musk Vows Record-Breaking Output

For those watching the rapid growth of artificial intelligence, a new manufacturing hub in Texas is set to play a pivotal role in meeting future demand. Elon Musk confirmed on October 20 that critical semiconductor suppliers are speeding up equipment shipments to support the Terafab project. This joint venture between Tesla and SpaceX targets the start of volume chip production at its primary site in Gibbons Creek, Texas, by the third or fourth quarter of 2028. While Musk called this timeline highly aspirational and noted it carries significant uncertainty, the push for faster hardware delivery signals a serious effort to scale up domestic chip manufacturing.

Terafab is a multi-billion dollar, vertically integrated facility designed to manufacture logic chips, memory, and advanced packaging in one location. Its ultimate goal is to generate one terawatt of AI computing power annually. To achieve this, the project leverages Intel's 14A manufacturing node technology and extreme ultraviolet lithography systems. Intel joined the venture in April 2026 to help co-develop and refactor the silicon fabrication technology. ASML, the world's only commercial supplier of the required $400 million EUV lithography machines, is a central partner. Unofficial sources indicated the first EUV tool was originally slated for mid-2027, though it remains unclear if the current expedited schedule has altered that specific date.

Musk made these announcements during a live broadcast of SpaceX's third quarter 2026 earnings call on X. He expressed gratitude to ASML and other suppliers for accelerating deliveries to meet aggressive targets. The project also involves a wide network of equipment providers, including Applied Materials, Lam Research, KLA Corporation, and Tokyo Electron. These firms will supply front-end processing, metrology, and process control machinery. Additionally, Tesla and SpaceX are in discussions with approximately ten South Korean equipment makers, including Hanmi Semiconductor and HPSP, for advanced packaging and specialized components.

Beyond the chip factory, Musk outlined ambitious computing capacity goals for his AI companies. He expects 2.5 to 3 gigawatts of active computing capacity by the end of 2026. He stated he is highly confident in adding another 10 gigawatts in 2027, predicting a total of 13 gigawatts of AI compute by the end of that year. To support this growth, SpaceX and xAI are aggressively procuring next-generation NVIDIA architecture. A major 440,000-GPU Nvidia Vera Rubin training cluster is planned to come online by the end of the second quarter of 2027. For context, SpaceX plans to produce its first experimental test chip at a research facility in Austin, Texas, around the second quarter of 2027.

Musk suggested that once fully operational, the commercial value of Terafab's chip output could rival the gross domestic product of a top 20 global nation. For perspective, Switzerland, currently the 20th largest economy, has a GDP of roughly $1.14 trillion. The facility aims to reduce reliance on external foundries like TSMC, supplying chips for xAI clusters, self-driving vehicles, Optimus robots, and SpaceX's orbital AI data center. However, experts have questioned the feasibility of the one terawatt ambition. Gartner estimates total global AI-optimized data center capacity at roughly 44 gigawatts as of late 2026. That figure represents only 4.4 percent of Terafab's planned output, highlighting the sheer scale of the project relative to the current global landscape.