SpaceX reveals production schedule during Oct. 20 earnings release, targeting initial test chips in 2027
ASML shortens equipment delivery times, Intel partners on tech; supply talks underway with roughly 10 domestic MPE firms
Elon Musk has set the mass-production target for his mega-scale semiconductor project, "Terafab," for the second half of 2028. According to the schedule, the project aims to run its first test chips in May or June of 2027 and commence full-scale production in the third quarter of the following year. Musk noted that equipment makers, including Dutch lithography giant ASML, are shortening their delivery times, signaling accelerated progress in building out the production facilities.
Terafab stems from Musk’s assessment that the production capacities of legacy semiconductor giants like Samsung Electronics and TSMC will be insufficient to meet the surging future demand for artificial intelligence (AI) chips. As the construction of proprietary production facilities and technical collaborations with global players get underway, materials, parts, and equipment (MPE) suppliers in South Korea and Japan are also moving to secure new supply channels.
Musk unveils schedule at Nov. 20 earnings call… Targets mass production in Q3 2028
Speaking during SpaceX’s third-quarter earnings call on the 20th (local time), Musk disclosed Terafab's production schedule in response to a Morgan Stanley analyst's question regarding semiconductor manufacturing equipment orders.
The project aims to boot up its first test semiconductors at an R&D facility in Austin, Texas, in May or June of 2027, with mass production scheduled to begin at the main production plant in Gibbons Creek in the third quarter of 2028. Musk also mentioned the fourth quarter of 2028 as a viable window for mass production.
Static random-access memory (SRAM) was presented as the initial test chip, serving as a vehicle to verify the operation of the production line prior to AI chip mass production. While acknowledging schedule uncertainties, Musk expressed gratitude to equipment suppliers like ASML for shortening lead times, calling the timeline "unbelievably fast for semiconductor manufacturing."
Terafab is a project designed to directly manufacture semiconductors required for Tesla’s autonomous driving and humanoid robots, as well as SpaceX’s AI computing infrastructure. Musk also stated a long-term goal of producing enough semiconductors annually to power 1 terawatt (TW) of AI computing.
Samsung and TSMC capacity falls short… Direct production of AI chips
Tesla has historically designed its own AI chips for autonomous driving and robotics while outsourcing manufacturing to external foundries such as Samsung Electronics and TSMC. The company is also currently developing next-generation AI5 and AI6 chips.
Musk previously stated that even by maximizing the production capacities of Samsung Electronics, TSMC, and Micron, it would be difficult to satisfy long-term semiconductor demand. The strategy is to supplement outsourced manufacturing by building proprietary plants to expand supply capacity.
Terafab aims to encompass logic and memory semiconductor manufacturing alongside advanced packaging. The development scope includes not only terrestrial AI chips but also semiconductors tailored for space environments.
Advanced semiconductors require time for process stabilization and yield optimization even after a plant is completed. In particular, because high-bandwidth memory (HBM) relies heavily on stacking, packaging technologies, and mass-production expertise, legacy players such as Samsung Electronics and SK hynix are expected to maintain their critical roles. Rather than replacing existing production facilities, Terafab focuses on securing incremental capacity to cope with soaring AI chip demand.
ASML shortens equipment lead times, Intel collaborates on tech… Expanding South Korean MPE supply chain
In line with its 2028 mass-production target, Terafab is simultaneously securing manufacturing technologies and procuring equipment. It is pursuing cooperation with Intel in advanced manufacturing processes and packaging, while also discussing the utilization of production facilities with TSMC. During an earnings call on the 15th, TSMC CEO C.C. Wei stated, "Discussions are ongoing and various approaches are possible, but the plants must be operated by TSMC."
The procurement of extreme ultraviolet (EUV) lithography systems essential for advanced semiconductor manufacturing is also underway. Terafab is reportedly scheduled to take delivery of its first EUV tool from ASML in mid-2027. With ASML having incorporated Terafab's demand into its equipment production planning, Musk directly highlighted the shortened lead times from suppliers during the earnings call on the 20th.
In Asia, supply participation has begun, centering on test production equipment and materials. Product orders are already underway in Japan, while initial orders have been placed in South Korea within the front-end and back-end equipment sectors.
HPSP reportedly secured an order in June for its high-pressure hydrogen annealing (HPA) equipment to be deployed in Terafab's R&D line. HPA is a tool that uses high-pressure hydrogen to cure micro-defects in wafers. Furthermore, reports surfaced in September regarding a supply contract won by Hanmi Semiconductor for advanced packaging equipment dedicated to AI system semiconductors, with discussions ongoing to expand the portfolio to include thermal compression (TC) bonders.
Engagement with domestic South Korean firms is expanding from equipment to materials and parts. According to semiconductor-focused media outlet The Elec on the 20th, representatives from Tesla and SpaceX met with approximately 10 South Korean MPE suppliers at "SEMICON West 2026" held in the U.S. from October 13 to 15. Process materials, piping, inspection components, and environmental equipment were reportedly included in the discussions, with non-disclosure agreements (NDAs) signed with select firms as supply items are being negotiated.
As discussions broaden from legacy equipment orders into materials and parts, South Korean MPE companies are finding growing opportunities for new orders. Once Terafab moves past trial production and initiates the establishment of large-scale mass-production facilities, orders for production-line equipment and materials—beyond just R&D tools—are expected to scale up further.
