Elon Musk, founder of Tesla and SpaceX, attended the annual technology conference of Dutch semiconductor equipment giant ASML Holding NV this week, detailing his much-discussed Terafab chip manufacturing plan to ASML employees. ASML CEO Christophe Fouquet engaged in an online dialogue with Musk, jointly exploring this ambitious semiconductor project.
Terafab is a joint venture between Tesla and SpaceX, aimed at producing advanced chips for artificial intelligence, robotics, and space data centers. The project plans to build a chip factory in Texas with an investment of at least $55 billion, with the total potential cost possibly reaching up to $119 billion subsequently. According to Musk, Terafab's ultimate goal is to produce chips with 1 terawatt of computing power annually, a figure approximately double the United States' current annual computing capacity.
Prior to the event, Musk expressed via social media that ASML should be cherished and supported, calling it arguably Europe's greatest company. This statement underscores ASML's central role in the Terafab plan—as the world's only company capable of producing extreme ultraviolet (EUV) lithography machines, ASML's equipment is an indispensable core tool for manufacturing advanced process chips at 2 nanometers and below.
It is noteworthy that the Terafab plan is closely linked to SpaceX's upcoming initial public offering scheduled for Friday. SpaceX's valuation and revenue projections are largely built on its grand plan to launch up to 1 million satellites and deploy orbital data centers in space, which will require massive chip support from Terafab.
ASML is taking this project seriously. Fouquet previously revealed to the media that he had discussed the Terafab plan with Musk, believing that SpaceX's goal of expanding AI computing power to the terawatt scale is very aggressive and is likely to cause supply bottlenecks in the semiconductor market in the coming years. Concurrently, ASML itself is accelerating its capacity expansion, planning to produce at least 60 EUV lithography systems in 2026 and further increase to over 80 units by 2027, in response to demand growth driven by investments in AI infrastructure.
The Chairman of TSMC has expressed a cautious attitude towards the Terafab plan, stating that building a large-scale, cutting-edge chip factory from scratch requires a considerable amount of time and that he can only say "good luck" to Musk. Analysts point out that the challenges facing the Terafab project include long equipment acquisition cycles, difficulties in improving yield rates, and high tape-out costs.
Despite numerous uncertainties, Musk's track record in engineering realization—the success of Tesla electric vehicles and SpaceX's reusable rockets—still leaves the industry with expectations for Terafab.
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