Musk Claims Terafab Chip Factory Will Match National Economies by 2028

Elon Musk has declared that the Terafab semiconductor project will generate enough commercial value to rival the GDP of a top-20 global nation once fully operational. This claim was made during a live broadcast of SpaceX’s third-quarter 2026 earnings call on X on October 20, where the CEO of both Tesla and SpaceX outlined the massive scale of the joint venture. The facility is designed to be a vertically integrated factory in Texas capable of manufacturing one terawatt of AI computing power per year, a figure Musk described as placing the single building within the top 20 global country GDPs, a tier currently anchored by Switzerland with an economy of approximately $1.14 trillion.

To achieve this unprecedented output, Terafab relies on a complex supply chain that is currently being fast-tracked. Musk stated that critical equipment suppliers, including ASML, are expediting shipments to support the project’s aggressive timeline. ASML, the world’s sole commercial supplier of the $400 million extreme ultraviolet lithography systems required for leading-edge chip production, is a pivotal partner in this effort. The project’s first EUV tool was reportedly scheduled for delivery in mid-2027, though it remains unclear if this specific date reflects the accelerated timeline Musk referenced in his remarks.

The facility’s primary target is to reach volume chip production at its Gibbons Creek, Texas site by the third or fourth quarter of 2028. Musk emphasized that these are "very aggressive dates" and carried "big error bars," acknowledging the ambitious nature of the schedule. Prior to this main production phase, SpaceX plans to manufacture its first experimental test chip at its research fabrication facility in Austin, Texas, around the second quarter of 2027. This initial step is part of a broader strategy to mitigate future shortages of cutting-edge AI processors currently dependent on external foundries like TSMC.

Intel officially joined the Terafab venture in April 2026, bringing its 14A manufacturing node technology to the table. This collaboration allows Terafab to utilize traditional extreme ultraviolet lithography systems while co-developing and refactoring silicon fabrication technology. The facility will handle logic, memory, and advanced packaging architectures in one location. To support this, Terafab is procuring next-generation hardware from major equipment manufacturers, including Applied Materials, Lam Research, KLA Corporation, and Japan’s Tokyo Electron. Additionally, Tesla and SpaceX are in discussions with approximately ten South Korean firms, such as Hanmi Semiconductor and HPSP, for advanced packaging and specialized components.

The chips produced at Terafab are intended to power a wide array of Musk’s ventures, including xAI’s AI clusters, self-driving vehicles, Optimus humanoid robots, and SpaceX’s orbital AI data center. To fuel this ecosystem, Musk revealed that SpaceX and xAI are aggressively acquiring next-generation NVIDIA architecture. He announced plans to bring a massive 440,000-GPU Nvidia "Vera Rubin" training cluster online by the end of the second quarter of 2027. This expansion is part of a broader push to increase computing capacity, with Musk expecting 2.5 to 3 gigawatts of active capacity by the end of 2026 and a highly confident projection of 13 gigawatts by the end of 2027.

Despite the detailed roadmap, experts have questioned the validity of the one-terawatt ambition. According to research firm Gartner, the total global AI-optimized data center capacity is roughly 44 gigawatts as of late 2026, which represents only 4.4% of Terafab’s planned annual output. While global AI computing capacity has grown at a rate of roughly 3.3 to 3.4 times per year since 2022, according to EpochAI, the scale of Terafab’s goal remains a significant leap beyond current market trends. The project represents a multi-billion-dollar bet on internal manufacturing to secure the future of AI infrastructure.