Musk Claims Chip Factory Will Out-Earn Most Nations

Elon Musk declared that a single building in Texas will generate enough commercial value to rank among the top 20 largest national economies in the world. This bold claim comes as the CEO of both Tesla and SpaceX confirmed that key semiconductor suppliers are rushing to deliver critical machinery for the Terafab project. The announcement took place during a live broadcast of SpaceX’s Q3 2026 earnings call on X on October 20. Musk emphasized that the timeline is highly aspirational and carries significant uncertainty, but the financial stakes are immense. The facility aims to produce 1 terawatt of AI computing power annually once fully operational.

The numbers behind the project are staggering. Terafab is a multi-billion-dollar, vertically integrated chip factory located in Gibbons Creek, Texas. The goal is to manufacture logic, memory, and advanced packaging architectures in one place. Musk stated that the company targets volume chip production by the third or fourth quarter of 2028. For comparison, the 20th largest economy in the world is Switzerland, with a gross domestic product of approximately $1.14 trillion. If Terafab achieves its output goals, its commercial value would sit within that elite tier. This single facility represents a massive shift in how advanced chips are produced and valued.

Several major players are involved in making this vision a reality. ASML, the sole commercial supplier of extreme ultraviolet lithography systems, is a critical partner. Each EUV system costs around $400 million. Musk said he is appreciative of ASML and other suppliers for accelerating equipment deliveries to meet the aggressive dates. The project also involves Intel, which joined the venture in April 2026 to help co-develop and refactor silicon fabrication technology using its 14A manufacturing node. Other suppliers include Applied Materials, Lam Research, KLA Corporation, and Tokyo Electron. Tesla and SpaceX are also in talks with about 10 South Korean equipment makers, including Hanmi Semiconductor and HPSP, for specialized components.

The stakes are high for the broader AI industry. Terafab aims to mitigate future shortfalls of cutting-edge AI processors from external foundries like TSMC. The chips produced here will supply Musk’s xAI clusters, self-driving vehicles, Optimus humanoid robots, and SpaceX’s orbital AI data center. SpaceX plans to manufacture its first experimental test chip at its research fabrication facility in Austin, Texas, around Q2 2027. Meanwhile, the next-largest project by planned capacity, the restructured 10 GW Project Stargate, is not expected to reach full capacity until the 2030s. Meta’s 5 GW Hyperion project has a similar timeline. To achieve its milestones, SpaceX and xAI are aggressively procuring next-generation NVIDIA architecture, with plans for a 440,000-GPU Nvidia Vera Rubin training cluster by the end of Q2 2027.

Experts remain skeptical of the 1 terawatt ambition. Research firm Gartner estimates the total global AI-optimized data center capacity is roughly 44 GW as of late 2026. This figure represents only 4.4% of Terafab’s planned output. Although global AI computing capacity has grown significantly since 2022, the jump required for Terafab is massive. The first EUV tool for Terafab was reportedly slated for delivery in mid-2027, though it remains unclear if this is the expedited timeline Musk referred to. Capacity remains tight across the semiconductor supply chain, making these accelerated deliveries even more remarkable.