Musk claims suppliers are rushing chip gear for his Texas factory

The race to build massive artificial intelligence infrastructure has intensified as major tech leaders look to control their own supply chains. Against this backdrop of growing demand for computing power, Elon Musk has outlined a bold new timeline for the Terafab semiconductor facility, a joint venture between his companies, Tesla and SpaceX.

Musk announced during a live broadcast of the Q3 2026 earnings call on October 20 that suppliers are moving equipment faster than originally planned. He stated that the project aims to begin volume chip production at its primary site in Gibbons Creek, Texas, by the third or fourth quarter of 2028. While Musk expressed appreciation for the acceleration, he cautioned that these are very aggressive dates with significant uncertainty, describing the timeline as highly aspirational with large error bars.

The numbers behind this venture are substantial. The facility is designed to produce one terawatt of AI computing power annually, a figure that would place the single building within the top 20 global economies by GDP. For comparison, Switzerland currently holds the 20th spot with a GDP of approximately $1.14 trillion. To achieve this output, the project will utilize extreme ultraviolet lithography systems based on Intel's 14A manufacturing node technology.

Key industry players are central to making this project work. ASML, the sole commercial supplier of the necessary $400 million lithography machines, is considered the most critical partner. Other major suppliers include American firms Applied Materials, Lam Research, and KLA Corporation, as well as Japan's Tokyo Electron. Tesla and SpaceX are also in discussions with about ten South Korean equipment manufacturers, including Hanmi Semiconductor and HPSP, to secure specialized components and processing tools.

Musk emphasized the collaborative nature of the supply chain, noting that the project involves vertical integration of logic, memory, and advanced packaging. Intel joined the venture in April 2026 to help co-develop the fabrication technology. Unofficial reports suggest the first EUV tool is slated for delivery in mid-2027, though it is unclear if this specific date reflects the expedited schedule Musk mentioned during the broadcast.

The chips produced at Terafab are intended to serve multiple sectors within Musk's ecosystem. The facility aims to supply processors for xAI clusters, self-driving vehicles, Optimus humanoid robots, and SpaceX's orbital data centers. By bringing production in-house, the project seeks to mitigate future shortages of cutting-edge AI processors that are currently sourced from external foundries like TSMC.

The stakes for this initiative are high, as the industry scales up rapidly. Musk also shared that his AI companies expect to have 2.5 to 3 gigawatts of computing capacity active by the end of 2026. He expressed high confidence in adding another 10 gigawatts in 2027, aiming for a total of 13 gigawatts of AI compute. This expansion includes plans to bring a 440,000-GPU Nvidia Vera Rubin training cluster online by the end of the second quarter of 2027.

Despite the ambitious goals, some experts remain skeptical of the one-terawatt target. Research firm Gartner estimates that total global AI-optimized data center capacity is currently around 44 gigawatts as of late 2026. This existing global total represents only a small fraction of Terafab's planned annual output, highlighting the sheer scale of the challenge ahead for the Texas facility.