The first production line aims for a monthly output of 3,000 units, and Musk's "super chip factory" requires suppliers to deliver at "light speed."

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Musk’s ambitions for chip manufacturing are moving from concept to substantive progress. The Terafab project team, a joint venture between his companies Tesla and SpaceX, has proactively contacted multiple semiconductor equipment suppliers, requesting quotes and delivery times, and demanding “light-speed” responses—this is the most concrete action taken so far for this grand plan.

According to Bloomberg on Thursday, sources revealed that the Terafab team has reached out to chip equipment giants such as Applied Materials, Tokyo Electron, and Lam Research, seeking quotes for a range of manufacturing tools including photomasks, substrates, etching machines, deposition equipment, cleaning devices, and testing instruments.

Meanwhile, Intel has publicly stated its participation in the Terafab project, with CEO Lip Bu Tan recently releasing photos of Musk’s visit to Intel’s Santa Clara headquarters.

The project’s short-term target is to establish a pilot production line in Austin, Texas, with a monthly capacity of 3,000 wafers, planning to start silicon wafer manufacturing in 2029 and gradually scale up thereafter. Bernstein analysts estimate the total capital expenditure needed for the project’s full launch could reach $5 trillion to $13 trillion USD.

Supplier Contacts in Full Swing; Samsung Proposes Alternative Solution

According to sources familiar with the matter cited by Bloomberg, the Terafab team has in recent weeks widely contacted businesses up and down the chip industry supply chain, including photomask makers, substrate suppliers, and various equipment vendors for etching, deposition, cleaning, and testing.

While requesting quotes, the Terafab team provided very limited product specification information. Sources revealed that the team once sent a quote inquiry to a supplier on a holiday Friday, demanding an estimate be submitted by the following Monday. Musk’s attitude was clearly conveyed: everything must move at “light speed.”

The project has also sought support from chip manufacturing partner Samsung Electronics. However, according to sources, Samsung did not respond directly, instead proposing to allocate more production capacity to Tesla in its planned factory in Taylor, Texas, as an alternative. Spokespersons from Applied Materials, Tokyo Electron, Lam Research, and Samsung all declined to comment.

Ambitious Vision, Targeting TSMC’s Dominance

Terafab’s ultimate goal is to provide 1 terawatt of computing power supply per year, a scale far exceeding current global chip production capacity. Musk officially unveiled the plan in March this year, aiming to enter the advanced chip manufacturing sector led by TSMC.

The chips produced by the project will primarily serve Musk’s AI company xAI, humanoid robot Optimus, Robotaxi, as well as SpaceX and xAI’s space data centers. Musk stated that xAI is expected to consume most of the project’s capacity.

The project seeks to internalize the entire chip manufacturing process from photomask production to testing and packaging. In terms of talent reserves, Musk’s team has invited engineers from Applied Materials, Samsung, TSMC, and other companies, covering chip design, power management, plant construction, procurement, and other specialties. Tesla board member Ira Ehrenpreis also accompanied Musk to visit Intel headquarters earlier this month.

Widespread Industry Doubt, Astronomical Capital Demands

Although Terafab’s moves are becoming increasingly concrete, the semiconductor industry still widely doubts its feasibility. Bernstein analysts estimate that the capital expenditures required for the project range from $5 trillion to $13 trillion USD, a staggering scale.

Currently, the project has not placed any fixed orders, and neither the technology roadmap nor the final production location has been determined. Whether the project will expand to a single “super factory” or multiple sites outside Texas is also unclear.

Tammy Qiu, head of technology equity research at Hamburg investment bank Berenberg, told Bloomberg that “the project’s intent is genuine” but there will be no substantive progress in the next two years. She said Berenberg has not included Terafab in its financial models for ASML. ASML is the only company in the world capable of producing extreme ultraviolet lithography machines, essential for any manufacturer wishing to mass-produce the most advanced chips. However, it is unclear whether Musk’s team has contacted this Dutch company.

Musk has repeatedly accomplished feats previously deemed impossible—such as pioneering commercial spaceflight with SpaceX and promoting electric vehicles with Tesla. But given the extreme costs and complexity of chip manufacturing, Terafab may ultimately only materialize in a much more limited form.

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