Tesla, SpaceX Pursue $16.8B TerraFab Chip Project, Court South Korean Suppliers

Tesla and SpaceX are advancing TerraFab, a semiconductor venture with xAI, backed by an initial $16.8 billion investment and targeting one million wafers per month within a decade. The companies met roughly 10 South Korean materials, components and equipment suppliers at SEMICON WEST 2026 in Seoul from October 13 to 15 to build out the supply chain. Several Korean firms are already in talks or under agreements. HPSP agreed to supply one high-pressure hydrogen annealing tool to the research line, MICO subsidiary KOMICO signed a three-way NDA with Tesla and SpaceX about a month ago to discuss cleaning services for a Texas R&D line, and ISC has moved to exchanged samples and R&D design data. BMT continues valve and fluid component talks, while UniSem signed an NDA on environmental equipment and Dongjin Semichem began supply evaluations two to three months ago. Most of the Korean companies are existing Tesla and SpaceX partners. Supply chain resources from Intel and GlobalFoundries have also been brought in as their executives and purchasing staff join. TerraFab reportedly aims to secure quotes below Chinese vendors while negotiating with Fujifilm, Lam Research and Applied Materials. SpaceX signed a Texas tax abatement agreement earlier this month, with construction begun on a first-phase 100,000-wafer facility due before 2030.