Terafab Targets Volume Chip Production in Third Quarter of 2028 With Intel Participation
Key Facts
Elon Musk said Terafab, a joint project between SpaceX and Tesla in which Intel is participating, aims to achieve volume chip production in the third quarter of 2028, according to Reuters, citing a SpaceX call. The date sets the target horizon for producing chips to support Musk's companies' artificial intelligence and robotics plans, under a project spanning a research facility and a fully integrated semiconductor plant. The project aims to produce chips providing 1 terawatt of computing capacity annually, according to the targets Musk outlined during the call. Musk described the target dates as "highly ambitious," presenting them as an aspiration for the company. Securing sufficient quantities of semiconductor manufacturing equipment from ASML or U.S. suppliers is among the challenges in executing the project, according to Reuters.
The timeline comments follow Intel's earlier announcement that it was joining Terafab to manufacture chips supporting Musk's ambitions in robotics and data centers, according to Reuters. Intel Chief Executive Lip-Bu Tan confirmed the company's continued participation in the project, in comments carried by Bloomberg and reported by Reuters. Regarding the plant's construction and operation, Musk said his companies would handle both tasks, adding: "We will build the factory and run it." He also raised the possibility of Taiwan Semiconductor Manufacturing Co. participating under a different arrangement, saying: "Perhaps Taiwan Semiconductor Manufacturing Co. will sublease part of Terafab." The companies have not announced how the collaboration with Intel will work in practice, while the possibility of subleasing raised by Musk remains separate from Tan's confirmation of his company's continued participation.
On funding, the Texas governor's office announced that capital investment in the project's first phase exceeds $16.8 billion, as part of SpaceX's expansion into semiconductor manufacturing in the state. That amount relates specifically to the first phase, which the state expects to create 3,000 new jobs, according to the governor's office announcement on the project. The phase combines capital spending on the facility with the addition of associated jobs, as part of the establishment of SpaceX's integrated plant in Grimes County. Texas awarded SpaceX a $30 million grant from the Texas Enterprise Fund, according to the same office. The grant forms part of the state's support package for the project, alongside the company's announced investment commitment and first-phase employment projections.
Grimes County, Texas, was selected as the site for SpaceX's integrated semiconductor plant, according to the governor's office announcement on the expansion. The planned facility covers 100 million square feet, in a project that aims to bring the production chain under one roof. The announced site plan calls for consolidating semiconductor production-chain operations within the integrated facility that Musk's companies will build and operate. The governor's office said strong infrastructure and logistical advantages were among the reasons Texas was chosen to host the project. The office cited those two factors in outlining the state's strengths underpinning the decision to build the plant, alongside its announcement of the facility's location and size and the investment and jobs expected in its first phase.
For Intel, participation in Terafab comes against a backdrop of substantial operating losses in its chip manufacturing business, according to figures Reuters reported when the company announced it was joining the project. Intel's chip manufacturing business posted an operating loss of $10.32 billion in 2025, while revenue rose just 3% over the same period. Annual revenue growth was thus accompanied by a continued operating loss in the business whose manufacturing expertise the company is contributing to Musk's project. Intel's earlier announcement that it was joining links the project to robotics and data-center needs, two of the applications targeted by the announced chip manufacturing plans. Tan's comments confirm that continued connection to the project, while details of how the companies will implement their commercial and technical collaboration remain undisclosed.
The next step in the timeline Musk outlined is to bring a test chip into operation at the project's research facility in Austin, before moving toward the volume production target. The planned chip is based on static random-access memory circuits, according to Reuters' account of the testing plan. Musk set its start-up date for "May or June next year," making it the next research milestone in chip development. The Austin test sits on the project timeline alongside the work needed to secure sufficient manufacturing equipment from the suppliers Musk cited. Following that research milestone, the announced target for achieving volume production remains the third quarter of 2028, among the dates Musk described as highly ambitious.