Tesla and SpaceX are building Terafab in Texas, with Musk aiming to establish a facility capable of processing 1 million wafers per month within 10 years. Intel has joined as a technology partner, and TSMC has confirmed discussions on potential cooperation. Procurement officials from Tesla and SpaceX visited Korean suppliers at SEMICON West. Whether Terafab will materialize as planned remains uncertain.
On October 21, during GTC Berlin, Nvidia announced several multi-billion-dollar deals with six major supply chain partners — Ibiden, Unimicron, Samsung Electro-Mechanics, SPIL, Amkor and KYEC — across substrates, advanced packaging, semiconductor testing and optical engines, to expand production capacity and reserve capacity for its AI accelerators; expanded supply is to be available from 2027 through 2028, with commitments and production roadmaps stretching through 2028. For substrates, Nvidia plans to secure 2.5x dedicated substrate capacity over the next three years: it earlier signed a deal to provide a multibillion-dollar capacity reservation advance to support Ibiden's Ono Plant in Japan (targeting 3x the plant's current capacity); the Samsung Electro-Mechanics deal will support facility upgrades and new plants in Busan and Sejong, with Nvidia projected to account for a significant portion of its output by 2028; a capacity reservation agreement with Unimicron supports its substrate expansion in Taiwan, expected to start providing capacity by Q2 2027 and reach full capacity by mid-2028. For co-packaged optics, Nvidia signed with SPIL to expand optical engine production capacity 15x (1,400%) by mid-2027, with plans to double again by the end of 2028. With Amkor, Nvidia targets a more-than-300% increase in interposer wafer capacity by the end of 2028 through advanced packaging expansion in South Korea; Amkor confirmed the deal is worth $1.3 billion, bringing Nvidia's total investment across Amkor's Arizona and South Korea facilities to $3 billion. For testing, on October 13 Nvidia signed a deal to pay KYEC $1.1 billion to reserve testing capacity at KYEC's new $1.4 billion U.S. facility (high-volume production slated to begin in April 2027; Singapore high-volume production expected to begin February 2027), with testing capacity expected to double from calendar 2026 to 2027; KYEC currently handles nearly all of Nvidia's chip testing. Per its August 2026 disclosures, Nvidia had accumulated $279 billion in outstanding supply and manufacturing-capacity commitments by July 2026. All expansion figures are announced plans and targets, not yet realized.
substratesadvanced packaginginterposer wafersNvidia, Ibiden and 7 totalTom's HardwareCapacity Change
Tesla and Nvidia are reportedly investing a combined KRW3.7 trillion (US$2.8 billion) to help Samsung Electro-Mechanics expand Ajinomoto Build-up Film (ABF) substrate production facilities in South Korea. The move reflects growing efforts by global technology companies to secure stable supplies of high-performance semiconductor substrates for AI applications.
According to Maeil Business Newspaper, citing industry sources, Samsung Electro-Mechanics is reportedly set to receive a combined KRW 3.7 trillion in investment from Tesla and NVIDIA to expand advanced chip substrate production; the investment is a reported commitment. The company has signed a long-term flip-chip ball grid array (FC-BGA) substrate supply agreement with Tesla and is expanding dedicated production lines at its Sejong facility. The substrates are expected to be used in AI chips for Tesla's autonomous electric vehicles and Optimus humanoid robots under a five-year agreement running from 2029 through 2033. Tesla will contribute approximately KRW 1.1 trillion toward the expansion in exchange for guaranteed substrate supplies; the funding forms part of Samsung Electro-Mechanics' KRW 4.27 trillion Sejong investment plan disclosed in September. Construction of the new FC-BGA substrate production facilities at the Sejong plant is expected to be completed by the end of 2027, with equipment installation and trial operations scheduled for the first half of 2028, mass production in the second half, and deliveries to Tesla expected to begin in 2029. According to TechNews, NVIDIA is also expanding global substrate capacity through supplier partnerships and aims to increase its total IC substrate capacity to 2.5 times its current level over the next three years: in Japan, NVIDIA has committed billions of dollars in capacity reservation prepayments to Ibiden, whose Ono plant aims to triple production capacity, with additional output expected to begin ramping in the first quarter of 2028; in South Korea, Samsung Electro-Mechanics is expanding its Sejong and Busan facilities, with NVIDIA expected to account for a significant share of its annual package substrate capacity by 2028 — while NVIDIA did not disclose an investment amount, Maeil Business Newspaper reports the commitment is believed to be worth approximately KRW 2.6 trillion; NVIDIA is also supporting Taiwan's Unimicron in expanding its KF substrate capacity through a capacity reservation agreement, with additional output expected from the second quarter of 2027 and full capacity targeted by mid-2028. Separately, Samsung Electro-Mechanics disclosed a KRW 360.5 billion contract on October 19 to supply memory semiconductor package substrates to an undisclosed global customer throughout 2027, with the customer not identified citing business confidentiality, according to Chosun Biz. The broader expansion comes as high-end FC-BGA production remains concentrated among a handful of suppliers, including Samsung Electro-Mechanics, Japan's Ibiden, and Taiwan's Unimicron; industry estimates cited by Maeil Business Newspaper put Ibiden's market share at more than 70%, with Samsung Electro-Mechanics working to narrow the gap.
FC-BGA substratememory semiconductor package substrateKF substrateSamsung Electro-Mechanics, Tesla and 5 totalTrendForceCapacity Change
Elon Musk said on October 20, during a live broadcast of SpaceX's Q3 2026 earnings call on X, that ASML and other critical semiconductor equipment suppliers have expedited shipments to the Terafab semiconductor manufacturing facility, a joint megaproject between Tesla and SpaceX, to support his aggressive timeline. He said the company is targeting volume chip production at Terafab's primary facility in Gibbons Creek, Texas, by the third or fourth quarter of 2028, emphasizing that the timeline is highly aspirational and carries 'big error bars'; SpaceX plans to manufacture its first experimental test chip at its research fabrication facility in Austin, Texas, around Q2 2027. Terafab will use traditional extreme ultraviolet (EUV) lithography systems utilizing Intel's 14A manufacturing node; Intel officially joined the Terafab venture in April 2026 to co-develop and refactor silicon fabrication technology. According to unofficial sources, Terafab's first EUV tool was reportedly slated for delivery in mid-2027, and it remains unclear if this is the expedited timeline Musk referred to. Other major suppliers include Applied Materials, Lam Research, and KLA Corporation, as well as Japan's Tokyo Electron; Tesla and SpaceX are also in talks with about 10 South Korean equipment makers, including Hanmi Semiconductor (advanced packaging equipment) and HPSP (high-pressure hydrogen annealing equipment). Musk also outlined AI compute goals: 2.5 to 3 GW of computing capacity active by the end of 2026, a total of 13 GW by the end of 2027, and plans to bring a 440,000-GPU Nvidia 'Vera Rubin' training cluster online by the end of Q2 2027. The event remains a plan/target and volume production has not been achieved.
EUV lithography systemslogic chipsmemoryASML, Tesla and 11 totalTom's HardwareCapacity Change
According to Reuters, Elon Musk said during a SpaceX conference call that his semiconductor manufacturing venture, Terafab, is targeting volume production in 3Q28, though he acknowledged that either 3Q or 4Q remains possible, describing the timeline as "very aggressive" given that advanced logic chip fabs in the U.S. typically take three years or more to build. Before volume production, Terafab aims to produce its first functional test chip using SRAM circuits around May or June 2027 at its Austin research facility. Equipment supply remains a key challenge, particularly from ASML and U.S. suppliers such as Applied Materials and KLA; asked whether SpaceX had ordered EUV lithography systems from ASML, Musk did not answer directly but thanked ASML and other suppliers for accelerating equipment deliveries. Per Reuters, ASML expects demand to outstrip supply through 2028 despite plans to expand EUV production capacity. According to The Elec, Tesla and SpaceX are in talks with South Korean semiconductor materials, components, and equipment suppliers to establish Terafab's supply chain, with several companies signing NDAs; HPSP and Hanmi Semiconductor remain the only two Korean equipment suppliers publicly linked to Terafab, and Terafab is reportedly seeking prices even lower than those offered by Chinese competitors. On manufacturing partners, TSMC Chairman and CEO C.C. Wei confirmed ongoing discussions but stressed that any fab involving TSMC must be operated by the company, contrasting with Musk's October 7 remarks that his companies would build and operate Terafab, potentially allowing TSMC to sublease space without an operational role; meanwhile, per Reuters citing Bloomberg, Intel CEO Lip-Bu Tan said the company would remain involved in Terafab.
SRAM test chipadvanced logic chipsEUV lithography systemsTerafab, Tesla and 10 totalTrendForceCapacity Change
According to the source, Samsung Electronics is expected to enter 2027 with approximately 80% of its planned memory production secured under long-term contracts, reinforcing its pricing position; this is an expectation, not an achieved result. Meanwhile, China's ChangXin Memory Technologies (CXMT) is expanding capacity and attracting attention from US tech companies seeking alternative DRAM suppliers. The source headline also references Samsung's HBM4 supply lock-in and that Apple and Tesla seek DRAM alternatives. The source does not state the cause.
According to commentary, Samsung Electronics' 2nm mass-production capability at its Taylor, Texas fab has become critical to its efforts to close the gap with TSMC, while Tesla's AI5 chip delivery schedule and Broadcom's potential 2nm orders hang in the balance. The company's ability to achieve competitive yields and stable output at the US facility will determine whether it can turn major customer orders into a broader foundry comeback. The source does not state the cause, and these statements are commentary rather than realized yield or order outcomes.
2nm processSamsung Electronics, TSMC and 4 totalDigiTimes AsiaCapacity Change
Tesla CEO Elon Musk has predicted a surge in Chinese memory chip production by 2028, raising questions over Samsung Electronics and SK Hynix's pricing power during an AI-driven dynamic random-access memory (DRAM) shortage. His remarks suggest that China's expanding capacity could offer major technology buyers alternative sources of supply and potentially ease memory costs. This is a prediction, not an implemented capacity change; the source does not state the cause.
DRAMSamsung Electronics, SK HynixDigiTimes AsiaCapacity Change
Samsung will reportedly break ground on its second chip fab in Taylor, Texas, this November, with mass production targeted for 2030. DigiTimes, citing South Korea's The Guru, reports that Taylor Fab 2 will span roughly 2.7 million square feet. Samsung also appears to have confirmed the timing at an October 15 event near the site, where Jonathan Taylor of Samsung Austin Semiconductor said construction should start early next month and that Fab 2 will be one and a half times bigger than Fab One. The process for Fab 2 has not been disclosed yet. As background, the first Taylor fab has slipped well past its original 2024 target and seems to be on track this time, with installed tools starting to run processes during staged qualification; Fab 1 uses EUV lithography for Samsung's 2 nm process, with operations planned by the end of 2026 and volume production in 2027. Its best-known customer is Tesla, which signed a $16.5 billion deal running through 2033 covering the AI6 chip, and Samsung is also set to build Tesla's AI5 on 2 nm in Texas. How orders will be split between the two fabs is unknown. Samsung plans to invest over $37 billion across Central Texas, backed by up to $4.745 billion in CHIPS Act funding. Given how long Fab 1 took, the source notes it is reasonable to expect the 2030 target will depend heavily on demand.
Musk's Terafab facility spans 10 million sq. ft and will produce logic, memory, and AI chips to meet SpaceX and Tesla's 1PW compute demand. Despite Jensen Huang calling it 'extremely hard,' Intel CEO Lip-Bu Tan views Musk as the ideal partner for unconventional manufacturing. This is a significant capacity expansion plan requiring close monitoring.
Samsung's Taylor, Texas fab will mass-produce Tesla's AI5 SoC on the SF2 2nm node, utilizing CHIPS Act funding. This marks a significant expansion of Samsung's US capacity and validates its advanced node. The move is bullish for Samsung's capacity utilization and LPDDR5X demand.
AI5 SoCLPDDR5X2nm Node (SF2)Samsung Electronics, Tesla and 3 totalTechPowerUpCapacity Change
Tesla hires Intel veteran Gary Jiang to oversee Terafab's 14A technology licensing, a strategic move to build its in-house semiconductor manufacturing capabilities.
Tesla plans to hire 1,000 workers at its Berlin Gigafactory to increase weekly production from 6,000 to 7,500 vehicles, supported by a 322% year-on-year surge in German registrations.
SpaceX plans to manufacture its own GPUs for a $1.75T IPO, citing a lack of long-term supply contracts. This strategic move involves billions in capital expenditures and utilizes Intel's 14A process node. Traders should watch for potential shifts in the AI accelerator supply landscape.
GPUsAI AcceleratorsSpaceX, Intel and 3 totalTom's HardwareCapacity Change
Samsung Electronics is reportedly increasing GDDR6 production for Tesla starting April 2026, while simultaneously halting mass production plans for its next-generation 1d DRAM due to insufficient yields. This represents a strategic reallocation of capacity within Samsung's memory portfolio, prioritizing a specific, high-demand customer over a next-gen node. Watch: Mixed supply signals; GDDR6 supply for Tesla may tighten, but broader DRAM capacity constraints could ease slightly due to the 1d DRAM delay.
Intel Foundry reported a year-over-year increase of over 50% in equipment orders, benefiting suppliers E&R Engineering and KINIK Company. The surge is driven by capacity expansion plans and the upcoming 14A node, which is expected to attract major customers like Apple and Nvidia by year-end.
Semiconductor Manufacturing EquipmentIntel, E&R Engineering and 3 totalTrendForceCapacity Change
TSMC announced expansion of 3nm capacity in Taiwan (H2 2027), Arizona (H2 2027), and Japan (2028), while planning to migrate some 5nm capacity to 3nm. This is driven by strong demand, high margins (>60%), and N3's dominant market position with zero merchant foundry competition. Neutral: Capacity additions are long-dated (2027-2028) and reflect structural demand, not an immediate supply shock.
Elon Musk's Terafab project is aggressively soliciting quotes and expedited delivery times from key semiconductor equipment suppliers, reportedly willing to pay a premium. This signals a new, well-funded source of demand entering the market for fab tools and materials. Bullish: The project's 'light speed' procurement and willingness to pay above market rates could tighten supply and support prices for critical semiconductor manufacturing equipment.
PhotomasksSubstratesEtchersApplied Materials Inc., Tokyo Electron Ltd. and 4 totalTom's HardwareCapacity Change
Related manufacturers
Applied Materials Inc., Tokyo Electron Ltd., Lam Research Corp., Samsung Electronics Co.