Report: Elon Musk in direct talks with ASML about a proposed $119B TeraFab chip plant in Texas

A report citing Reuters says Elon Musk has been in direct talks with ASML about a proposed TeraFab chip-manufacturing facility in Texas that could cost about $119 billion. The report adds that ASML’s CEO referred to Musk’s interest as “very serious,” suggesting the plan has moved beyond private ambition into discussions with at least one major semiconductor-equipment supplier.

The reporting frames TeraFab as an effort tied to AI infrastructure expansion. In that context, a chip foundry on the scale described would be intended to produce advanced semiconductors used in high-performance computing and AI systems. If realized, the project would represent a significant attempt to increase supply for an industry facing prolonged and at times unpredictable capacity constraints.

ASML is a leading supplier of lithography tools used in advanced chipmaking. Those systems are central to producing modern logic and memory, especially nodes used in cutting-edge computing. While the report does not provide technical specifications, it places ASML at the center of discussions, implying that the plan could involve access to advanced manufacturing equipment and associated services.

Tesla itself is not described in the report as making semiconductors for sale. Instead, the connection appears to be through Musk’s broader technology interests and the way large-scale chip capacity could support AI compute ecosystems. The report’s emphasis on AI infrastructure suggests the plant would likely be linked to compute demand beyond autos, potentially including in-house or partner-driven AI hardware development.

Details on timing, the exact location footprint in Texas, and whether the talks are for a full-scale manufacturing partnership or a more limited equipment and services arrangement were not included in the information provided by the report. It also is not clear whether the conversations would cover financing structure, government incentives, or the eventual customer or product mix for the facility.

From a sector standpoint, the prospect of a multi-year, $100 billion-scale chip facility would align with a global push to secure domestic and allied semiconductor supply chains. In recent years, equipment suppliers and chipmakers have all faced the strategic question of how quickly new capacity can be brought online, given the long lead times for complex equipment and the specialized workforce required.

Even if the talks are genuine and substantive, major uncertainties remain. Semiconductor projects at this scale typically require extensive permitting, complex capital expenditure planning, and long-term procurement commitments. The report does not state whether any binding agreement has been reached with ASML or whether the project would definitely proceed on the reported budget and timeline.

For investors and industry watchers, the next announcement to watch would be any formal confirmation from ASML, Tesla, or related entities, such as announcements about manufacturing partnerships, equipment orders, project milestones, or applications for incentives. Absent that, the most actionable takeaway is the apparent seriousness of dialogue between a chip-equipment leader and Musk regarding large-scale semiconductor capacity.