Target Set for Chip Production by Late 2028 at Texas Megaproject
Elon Musk outlines an accelerated schedule for manufacturing equipment and outlines aggressive targets for artificial intelligence compute capacity.
By Chinedu Okafor ·
The schedule for a massive new semiconductor factory in Texas is taking shape, but the timeline carries significant risk. Elon Musk announced that ASML and other critical suppliers are speeding up equipment deliveries for the Terafab project. He made the statement during a broadcast on October 20. The goal is volume production of chips by the third or fourth quarter of 2028. Musk acknowledged the dates are aggressive and carry big error bars.
Terafab is a joint venture between Tesla and SpaceX. The primary facility will be located in Gibbons Creek, Texas. SpaceX plans to manufacture its first experimental test chip at a research fabrication facility in Austin by the second quarter of 2027. The project aims to build a vertically integrated factory. It will fabricate logic, memory, and advanced packaging in one location. The facility will utilize Intel's 14A manufacturing node technology.
The scale of the project is massive. Terafab has a goal of manufacturing 1 terawatt of AI computing power per year. When fully operational, the commercial value of the output would place the facility within the top 20 global country GDPs. The 20th country on the list is Switzerland, with a GDP of around $1.14 trillion. The facility aims to supply chips for xAI clusters, self-driving vehicles, and Optimus humanoid robots.
The supply chain for the facility involves many major companies. Intel joined the venture in April 2026. ASML is the sole commercial supplier of the lithography systems required for production. Other suppliers include Applied Materials, Lam Research, KLA Corporation, and Tokyo Electron. Tesla and SpaceX are also in talks with about 10 South Korean equipment makers. These companies will provide specialized equipment and components.
Musk also discussed artificial intelligence compute capacity during the broadcast. He expects 2.5 to 3 gigawatts of computing capacity active by the end of 2026. He is confident about bringing an additional 10 gigawatts online in 2027. SpaceX and xAI are procuring next-generation NVIDIA architecture. They plan to get a 440,000-GPU training cluster online by the end of the second quarter of 2027.
The ambitious goals for Terafab face scrutiny from experts. Research firm Gartner estimates the total global AI-optimized data center capacity is roughly 44 gigawatts as of late 2026. This is 4.4% of Terafab's planned output. Global AI computing capacity has grown by roughly 3.3x to 3.4x per year since 2022. The project timeline remains highly aspirational.
Musk said the company is highly confident about bringing an incremental 10 gigawatts online in 2027. He also stated he would be surprised if they do not hit a total of 13 gigawatts of AI compute by the end of 2027. The next-largest project by planned capacity is the restructured 10 gigawatt Project Stargate. It was expected to reach full capacity in the 2030s.
Source: Tom's Hardware
