Terafab Aims for $1.14 Trillion Output by 2028 in Aggressive Chip Push

The commercial value of the planned Terafab chip output is projected to rival the gross domestic product of Switzerland, which stands at approximately $1.14 trillion. Elon Musk announced this valuation during a live broadcast of SpaceX's Q3 2026 earnings call on October 20. He stated that if the facility reaches full operational scale, the sheer volume of advanced chip production from a single physical building would place it within the top 20 global country GDPs. This bold claim underscores the immense financial stakes involved in the joint megaproject between Tesla and SpaceX.

The timeline for achieving this level of output is described by Musk as highly aspirational and carrying significant uncertainty. The primary facility in Gibbons Creek, Texas, targets volume chip production by the third or fourth quarter of 2028. Prior to this milestone, SpaceX plans to manufacture its first experimental test chip at its research fabrication facility in Austin, Texas, around the second quarter of 2027. Musk noted that these dates are very aggressive and that the company is appreciative of suppliers for accelerating equipment deliveries to support this schedule.

Key players in the semiconductor supply chain are central to this initiative. ASML, the sole commercial supplier of extreme ultraviolet lithography systems, is considered the most critical partner. Each of these EUV tools costs approximately $400 million. While the first EUV tool was reportedly slated for delivery in mid-2027 according to unofficial sources, it remains unclear if this aligns with the expedited timeline Musk referenced. Intel officially joined the venture in April 2026 to co-develop silicon fabrication technology using its 14A manufacturing node.

Other major suppliers include American manufacturers Applied Materials, Lam Research, and KLA Corporation, along with Japan's Tokyo Electron. These firms will provide front-end processing, metrology, and process control machinery. Tesla and SpaceX are also in negotiations with about ten South Korean equipment makers, including Hanmi Semiconductor and HPSP, for advanced packaging and high-pressure hydrogen annealing equipment. The facility will utilize traditional EUV lithography systems to fabricate logic, memory, and advanced packaging internal architectures in one location.

The project aims to produce one terawatt of AI computing power per year, a target that experts have questioned given that the total global AI-optimized data center capacity is roughly 44 gigawatts as of late 2026. To achieve its broader AI goals, Musk revealed that 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. This is part of a larger push to bring 13 gigawatts of AI compute capacity online by the end of 2027.

The chips produced at Terafab are intended to supply Musk's xAI clusters, self-driving vehicles, Optimus humanoid robots, and SpaceX's orbital AI data center. The facility is designed to mitigate future shortfalls of cutting-edge AI processors from external foundries. By integrating the entire manufacturing process internally, the project seeks to secure the supply chain for the broader AI industry while supporting the rapid expansion of computing infrastructure across multiple sectors.

Despite the ambitious scope, the project faces challenges in a market where capacity remains tight across the semiconductor supply chain. The multi-billion-dollar investment in Texas represents a significant vertical integration effort. The success of Terafab will depend on the ability of global suppliers to maintain accelerated delivery schedules while managing the complex logistics of building a facility capable of such massive annual output.