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Tesla ([TSLA-US](https://invest.cnyes.com/usstock/detail/TSLA)) and SpaceX ([SPCX-US](https://invest.cnyes.com/usstock/detail/SPCX)) CEO Elon Musk is aggressively pushing forward an unprecedented vertically integrated semiconductor project, with a potential investment scale that could reshape the global semiconductor equipment market. According to a UBS research report released on Tuesday (7th), SpaceX's "Terafab" project is expected to procure wafer fabrication equipment (WFE) over the next five years equivalent to the total global WFE market volume this year.

![Image 1: cover image of news article](https://cimg.cnyes.cool/prod/news/6526819/l/8cff0120cb5d543ea44c21484bdd7824.jpg)

Musk's Terafab could disrupt the global semiconductor equipment market landscape. (Image: Shutterstock)

Analysts expect Terafab's pilot production line to launch as early as 2027, with equipment orders already being placed at an initial scale of around $5 billion.

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Terafab's core strategic logic mirrors Tesla's approach when it built its own battery supply chain. At the Terafab launch event in March, Musk stated that the combined AI computing output of all current global fabs amounts to only about 2% of SpaceX's target demand.

He emphasized that existing suppliers—including TSMC ([2330-TW](https://www.cnyes.com/twstock/2330)), Samsung, and Micron ([MU-US](https://invest.cnyes.com/usstock/detail/MU))—are expanding far too slowly to keep up with SpaceX's needs, adding: "Either we build Terafab, or there are no chips."

In terms of product planning, Terafab will focus on two main chip types:

*   Edge inference chips for Optimus humanoid robots
*   High-power chips optimized for space environments

Musk estimates ground-based computing demand at 100–200 GW per year, while space-based computing demand could reach around 1 TW annually.

In terms of factory architecture, Terafab plans to integrate mask manufacturing, front-end logic and memory processes, advanced packaging, and testing all within a single facility, aiming for an ultra-fast "design-manufacture-test-update" closed loop.

UBS's report describes it as a truly vertically integrated semiconductor complex.

UBS analyst John Hodulik predicts SpaceX's AI business will have total capital expenditure of approximately $1.1 trillion over the next five years, with about 20% (over $225 billion) going to Terafab.

Applying the industry-standard conversion rate of 60% of CapEx into WFE, cumulative WFE procurement over five years would reach roughly $135 billion—about the same as this year's total global WFE market.

In terms of timeline, Terafab's WFE spending is expected to start at around $5 billion in 2027 for the pilot line, rise to about $10 billion in 2028, and jump to over $50 billion annually by 2030–2031.

At that point, the global WFE market would suddenly gain a new buyer with procurement volumes comparable to TSMC.

The report also notes that if Terafab proceeds as planned, global WFE spending could approach $300 billion by 2029.

Regarding site selection, SpaceX has filed a tax abatement application in Grimes County, Texas. Related documents show an initial fab investment of $55 billion, which could expand to $119 billion if all planned phases are realized.

Initial capacity布局 is estimated to include approximately 80,000 wafers per month of memory wafer capacity, plus two logic/foundry fabs each with around 20,000 wafers per month, along with a mask shop and back-end packaging and testing capacity.

On technology partnerships, the report indicates Intel ([INTC-US](https://invest.cnyes.com/usstock/detail/INTC)) is actively negotiating with SpaceX, potentially playing a role similar to the technology transfer framework between IBM and AMD. This would involve licensing process flows, manufacturing IP, PDK design rules, and tool recipes to Terafab, while Intel retains underlying technology ownership and collects licensing fees.

UBS also presents a scenario: if the pilot line proves successful, Intel could incorporate its "Ohio One" facility into the Terafab system as a joint venture. That facility is large enough to support two fabs.

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*English version auto-generated by IDAEO*


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