Musk targets 1 terawatt chip output by 2028

The semiconductor industry faces a race to build capacity for artificial intelligence. Elon Musk announced that suppliers are speeding up deliveries for a new Texas facility.

Musk made the statement during a live broadcast of SpaceX’s third-quarter 2026 earnings call on X. This happened on October 20. He confirmed that ASML and other key vendors are expediting shipments. These tools are essential for the Terafab megaproject.

Terafab is a joint venture between Tesla and SpaceX. The primary facility will be located in Gibbons Creek, Texas. Musk said the company aims to start volume chip production by the third or fourth quarter of 2028. He described this timeline as highly aspirational. He noted that it carries big error bars.

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. He serves as CEO for both companies involved in the project. SpaceX also plans to produce its first experimental test chip at a research fab in Austin, Texas. This is expected to happen around the second quarter of 2027.

The facility is designed to be vertically integrated. It will manufacture logic, memory, and advanced packaging in one place. The ultimate goal is to produce one terawatt of AI computing power per year. Musk claimed the commercial value of this output could rival the GDP of the 20th largest country in the world. Switzerland currently holds that spot with a GDP of roughly $1.14 trillion.

The project relies on Intel’s 14A manufacturing node. Intel joined the venture in April 2026 to help co-develop silicon fabrication technology. ASML is the sole commercial supplier of the $400 million extreme ultraviolet lithography systems needed. Unofficial sources suggested the first EUV tool was slated for mid-2027. It is unclear if the expedited timeline Musk mentioned changes this date.

Other major suppliers include Applied Materials, Lam Research, KLA Corporation, and Tokyo Electron. These firms will provide front-end processing and metrology machinery. Tesla and SpaceX are also in talks with about 10 South Korean equipment makers. These include Hanmi Semiconductor and HPSP, which specialize in packaging and annealing equipment.

Experts have questioned the feasibility of the one-terawatt target. Gartner estimates total global AI-optimized data center capacity at roughly 44 gigawatts as of late 2026. This is only 4.4% of Terafab’s planned output. The facility aims to reduce dependence on external foundries like TSMC. It will supply chips for xAI clusters, self-driving cars, Optimus robots, and SpaceX’s orbital data center.

Musk also outlined near-term AI ambitions during the broadcast. He expects his companies to have 2.5 to 3 gigawatts of computing capacity active by the end of 2026. He is highly confident about adding 10 gigawatts in 2027. He said he would be surprised if they do not reach a total of 13 gigawatts by the end of 2027. To achieve this, SpaceX and xAI are procuring next-generation NVIDIA architecture. They plan to have a 440,000-GPU Nvidia Vera Rubin training cluster online by the end of the second quarter of 2027.