Although the $20 billion funds injected in Elon Musk's TeraFab project — which is supposed to build logic and memory chips as well as package them under one roof — is barely enough to build a 7nm-class logic fab, Elon Musk's eventual ambitions include producing millions or billions of AI chips that consume 1 terawatt (1 TW) of power per year. This ambition by far exceeds today's industry capacity, and if Musk pursues it, he will need $5 trillion, according to Bernstein, a premier semiconductor analysis firm (via @Jukan05). Interestingly, the order of the sum is similar to what Sam Altman was seeking for his failed fab network a couple of years ago.
The firm gets these figures, which it describes as "a very rough back-of-the-envelope wafer capacity calculation," by using a top-down approach, translating rack-level power demand into required semiconductor manufacturing capacity. Using power consumptions of rack-scale systems (120 kW for Rubin to 600 kW for Rubin Ultra), analysts convert system volumes into chip counts and then into wafer demand using their die sizes, such as ~825 mm² for GPU dies, ~800 mm² for CPU dies, the number of HBM stacks, and yields.
But Bernstein seems to overstate the typical capacity of logic fabs (50,000 wafer starts per month, WSPM, instead of 20,000 WSPM), understates the capacity of DRAM fabs (50,000 WSPM instead of 100,000 – 200,000 WSPM), and assumes prices per fab at $35 million, which likely inflates total estimates even if the multi-trillion-dollar magnitude is generally correct.
Trillions for fabs and packaging facilities
Based on what we know about the modern semiconductor industry, a modern leading-edge logic fab typically delivers around 20,000 WSPM, or roughly 240,000 wafers per year. To produce 25.116 million logic wafers annually, TeraFab would require about 105 fabs at perfect yields, or 126 fabs at 80% yields. A 2nm-class capable fab costs from $25 billion to $35 billion (~$30 billion midpoint), so logic capacity alone would require around $3.15 trillion, assuming a 100% yield and $3.78 billion at 80% yield.
For context, TSMC shipped 15.023 million 300-mm-equivalent wafers in 2025, which includes 200-mm wafers and 300-mm wafers made on outdated process technologies. Also important, TSMC currently operates about 50 300-mm fab modules built over two decades.
Large-scale high-bandwidth memory (HBM) production is also crucially important for achieving Elon Musk's goals for TeraFab. Modern DRAM fabs — run by Micron, Samsung, and SK hynix — typically offer 100,000 to 200,000 WSPM (so, let us take 150,000 WSPM as the midpoint). Producing 15.824 million HBM4E wafers would require about 9 fabs at 100% yield, or ~12 fabs at 70% yield. Each of these fabs costs at least $20 billion, or roughly $240 billion for front-end memory capacity alone. However, HBM output is constrained by stacking and packaging capabilities and yields, not only by the output of DRAM devices. For comparison, the three major DRAM makers currently operate only ~30 fab modules built since the early 2000s.
Advanced packaging facilities used for 2.5D and 3D integration, as well as HBM assembly, cost around $2 billion to $3.5 billion per phase, and TeraFab would require tens or even hundreds of such facilities to assemble AI processors and HBM stacks, which means hundreds of billions of dollars in additional investment.
Altogether, TeraFab would require well north of $4 trillion, which generally aligns with Bernstein's $5 trillion estimate, excluding land, process R&D, software, and ecosystem development.
Constraints beyond money
Raising $5 trillion would be extraordinarily difficult. For context, companies like Nvidia, Apple, and Alphabet have market capitalizations of $4.34 trillion, $3.71 trillion, and $3.5 trillion, respectively, so Musk would need to mobilize capital exceeding the value of the world's most valuable corporations. It is hard to imagine a private fundraising round, consortium, or even sovereign funding of this magnitude. For example, even if the U.S. would like to fund Musk's semiconductor venture, it could not do this that easily, as its budget for this year is about $7 trillion.
The only conceivable path would involve multi-government backing, sovereign wealth funds, hyperscalers, and capital markets acting in concert. However, we doubt this is possible at all. Furthermore, at a scale of $5 trillion deployed within a foreseeable timeframe, constraints would extend beyond capital and would include limited availability of wafer fabrication equipment, construction materials, and a sufficiently large and skilled workforce to build, operate, and maintain such fabs.
Then again, does Musk really plan to build a foundry that would leave behind TSMC, Samsung, and Intel combined just to make enough chips for Tesla, SpaceX, and xAI? Well, this is an open question.
