Musk's Terafactory runs into ASML's monopoly

Musk's Tera Factory: the plan that runs into ASML's monopoly

In Texas, a plant that aims to make more chips than the rest of the world combined. Elon Musk has unveiled the 'Tera Factory', an all-in-one facility that promises to multiply global semiconductor output tenfold, with operations set to begin in late 2026 and full capacity by 2027. The news sounds like a revolution, but ASML's shadow looms over the announcement.

The bottleneck nobody mentions

The key lies in the equipment. ASML is the world's only maker of EUV lithography machines, the technology essential for the most advanced chips. And its production is already booked for years to come by the big players: Intel, TSMC, Samsung, Micron and SK Hynix. Where will Musk get the machines? The announcement offers no answer.

What's more, lithography masks and photoresists are a de facto Japanese monopoly, with no clear investment to expand capacity. For skeptics, this is hype on the same scale as Starship.

The alternative route: mature nodes

It's not all about EUV. For applications like automotive, 90-130 nanometer nodes are more than sufficient and can be produced with deep UV, where competition is broader. In fact, Musk's strategy could be to make less cutting-edge but adequate chips for his cars and robots, ending his purchases from ASML.

The problem: AI and autonomous driving require the very latest. And there, dependence on ASML is total.

Domino effect

If the plant actually produces, the impact will be significant. The hyperscalers — the cloud giants — would see the balance of power in chip supply upended. But first comes the hardest part: getting the machines to make them.

Meanwhile, waiting for the market has become a sport. Some are already calculating the Tera Factory's IPO price, forgetting it isn't even an independent company. The real gamble isn't making ten times more chips, but doing so without ASML's blessing. And that, for now, has no plan.