First Production Line Targets 3,000 Wafers Monthly; Musk's 'Super Chip Factory' Demands 'Light-Speed Supply' from Vendors

Musk's ambition for chip manufacturing is moving from concept to substantive progress. The Terafab project team, a joint venture between Tesla and SpaceX under his umbrella, has proactively contacted multiple semiconductor equipment suppliers to request quotes and delivery timelines, demanding they respond at "light speed"—the most concrete action taken so far on this grand plan.

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

Meanwhile, Intel has publicly declared its participation in the Terafab initiative. Its CEO, Lip Bu Tan, recently shared photos of Musk visiting Intel's Santa Clara headquarters.

The project's near-term goal is to establish a pilot production line in Austin, Texas, with a monthly capacity of 3,000 wafers, planning to commence silicon wafer manufacturing in 2029 before gradually scaling up. Bernstein analysts estimate that the full implementation of the project will require capital expenditures ranging from $5 trillion to $13 trillion.

Vendor Engagement Expands; Samsung Proposes Alternative

According to information obtained by Bloomberg from knowledgeable sources, the Terafab team has extensively engaged with companies across the chip industry supply chain over the past few weeks, covering photomask manufacturers, substrate suppliers, and vendors specializing in etching, deposition, cleaning, and testing equipment.

While requesting quotes, the product specifications provided by the Terafab team remain extremely limited. Sources revealed that the team sent an inquiry to one supplier on a holiday Friday, demanding an estimated quote be submitted by the following Monday. Musk's stance was clearly communicated: proceed at "light speed."

The project also sought support from chip manufacturing partner Samsung Electronics. However, according to sources, Samsung did not respond directly but instead proposed allocating additional capacity within its planned factory in Taylor, Texas, as an alternative solution. Spokespersons for Applied Materials, Tokyo Electron, Lam Research, and Samsung declined to comment.

Grand Vision Targets TSMC Dominance

Terafab's ultimate goal is to provide an annual computing power supply of 1 terawatt—a scale far exceeding global existing chip capacity. Musk officially disclosed the plan in March this year, intending to enter the field of advanced chip manufacturing dominated by Taiwan Semiconductor.

Chips produced by the project will primarily serve Musk's artificial intelligence business xAI, humanoid robots Optimus and Robotaxi, as well as SpaceX and xAI's space data centers. Musk stated that xAI is expected to consume the vast majority of this capacity.

The project also seeks to internalize the entire chip manufacturing process, from photomask production to testing and packaging. In terms of talent acquisition, the Musk team has extended recruitment invitations to engineers from companies like Applied Materials, Samsung, and Taiwan Semiconductor, covering multiple professional directions including chip design, power management, facility construction, and procurement. Tesla board member Ira Ehrenpreis also accompanied Musk on the visit to Intel's headquarters earlier this month.

Industry Doubts Mount Amid Astronomical Capital Requirements

Despite the increasingly concrete actions of Terafab, the semiconductor industry remains widely skeptical about its feasibility. Bernstein analysts estimate that the project requires capital expenditures between $5 trillion and $13 trillion, a scale that is staggering.

Currently, no fixed orders have been placed, and neither the technology route nor the final production location has been determined. It remains unclear whether the project will expand into a single super-factory or multiple sites beyond Texas.

Tammy Qiu, head of technology stock research at Hamburg-based investment bank Berenberg, told Bloomberg, "The intent behind the project is real," but added that there would be no substantial progress within the next two years. She noted that Berenberg has not yet included Terafab in its financial forecasting model for ASML. ASML is the world's sole producer of extreme ultraviolet lithography machines, essential for any manufacturer aiming to mass-produce the most advanced chips, though it remains unclear whether Musk's team has already contacted this Dutch company.

Musk has previously accomplished feats many deemed impossible—pioneering commercial spaceflight with SpaceX and driving the adoption of electric vehicles with Tesla. However, the extreme costs and complexity of chip manufacturing suggest that Terafab may ultimately materialize only in a more limited form.