Tesla and SpaceX Target 2028 Chip Production Amidst Accelerated Supplier Deliveries

Tesla and SpaceX are targeting the start of volume chip production at their new Terafab facility in Texas by the third or fourth quarter of 2028, a timeline Elon Musk describes as highly aspirational. Speaking on a live broadcast during SpaceX's Q3 2026 earnings call on October 20, Musk stated that the company expects to reach this milestone with significant uncertainty, noting the dates carry "big error bars." The announcement confirms that key suppliers, including ASML, are expediting the delivery of critical semiconductor equipment to support the joint megaproject.

The push for earlier production follows a series of strategic moves over the past year. In April 2026, Intel officially joined the Terafab venture to co-develop silicon fabrication technology, specifically providing access to its 14A manufacturing node. The facility in Gibbons Creek, Texas, is designed to be a vertically integrated factory capable of producing logic, memory, and advanced packaging in a single location. While the primary target is 2028, SpaceX plans to manufacture its first experimental test chip at its Austin research facility around Q2 2027. Unofficial sources previously suggested the first extreme ultraviolet lithography tool would arrive in mid-2027, a date that may have been moved up due to the recent announcements.

The scale of the project is intended to meet the massive computational demands of Musk’s various enterprises. Terafab aims to manufacture one terawatt of AI computing power annually, a figure that would make the facility’s commercial output comparable to the GDP of the top 20 countries globally, with Switzerland serving as the 20th-ranked benchmark at approximately $1.14 trillion. The chips produced will power xAI clusters, self-driving vehicles, Optimus humanoid robots, and SpaceX’s orbital AI data centers. To achieve these goals, SpaceX and xAI are aggressively procuring next-generation NVIDIA architecture, with plans to bring a 440,000-GPU Vera Rubin training cluster online by the end of Q2 2027.

Musk outlined broader ambitions for his AI portfolio during the same broadcast, expecting 2.5 to 3 gigawatts of active computing capacity by the end of 2026. He expressed high confidence in adding 10 gigawatts in 2027, predicting a total of 13 gigawatts of AI compute by the end of that year. This trajectory contrasts with the next-largest projects, such as the restructured 10-gigawatt Project Stargate and Meta’s 5-gigawatt Hyperion, both of which are expected to reach full capacity in the 2030s.

The supply chain for Terafab involves numerous international partners. In addition to ASML and Intel, American manufacturers Applied Materials, Lam Research, and KLA Corporation, as well as Japan’s Tokyo Electron, are providing front-end processing and metrology machinery. Tesla and SpaceX are also in negotiations with approximately ten South Korean equipment makers, including Hanmi Semiconductor and HPSP, for specialized components. Despite these collaborations, experts have questioned the feasibility of the one-terawatt ambition. Research firm Gartner estimates total global AI-optimized data center capacity at roughly 44 gigawatts as of late 2026, meaning Terafab’s planned output would exceed the current global total by a wide margin.

The project is ultimately designed to mitigate future shortfalls of cutting-edge AI processors from external foundries like TSMC. While the expedited shipments from suppliers like ASML suggest a move toward accelerated timelines, the industry remains cautious. With global AI computing capacity growing at a rate of roughly 3.3 to 3.4 times per year since 2022 according to EpochAI, the leap to Terafab’s projected scale remains a significant challenge for the semiconductor supply chain.