Key Takeaways

  • Terafab is widening supplier talks to Korean equipment, materials and component manufacturers beyond HPSP and Hanmi Semiconductor.
  • The project targets an initial 100,000 wafer starts per month before 2030 and 1 million per month within 10 years.
  • Aggressive pricing demands and the exclusion of Chinese suppliers could create both opportunities and margin pressure for Korean vendors.

Elon Musk’s Terafab is rapidly expanding its search for semiconductor suppliers, with Tesla and SpaceX approaching Korean manufacturers across equipment, materials, facility components and chip-testing products.

The outreach goes well beyond HPSP and Hanmi Semiconductor, the two Korean suppliers previously associated with the project. According to TheElec, Terafab personnel visited around 10 Korean booths during the opening morning of SEMICON West in San Francisco last week. The companies approached included ENF Technology, Dongjin Semichem, Hanmi Semiconductor, Unisem and MiCo.

That kind of concentrated activity suggests procurement is moving from broad planning into supplier qualification. Several companies have reportedly signed nondisclosure agreements. One received an NDA by email on the evening of Terafab’s booth visit, an unusually compressed timeline for a semiconductor project.

Hanmi Semiconductor is discussing TC bonders for Terafab, while HPSP has agreed to provide one high pressure hydrogen annealing tool for the research and development line. MiCo’s cleaning unit Komico signed a three-way NDA with Tesla and SpaceX about a month ago. ISC, meanwhile, is exchanging samples for rubber test sockets.

The list spans several layers of semiconductor manufacturing. TC bonders support advanced packaging processes, annealing systems modify material properties under controlled conditions, and test sockets connect packaged chips to testing equipment. Process chemicals, piping and cleaning systems are less visible, but fabs cannot operate without them. A giant factory is still dependent on thousands of highly specific parts.

At SEMICON West, an industry event run by SEMI, Terafab’s direct approach to Korean exhibitors also showed how supply-chain strategy is shaping vendor selection. Tesla and SpaceX reportedly do not purchase from Chinese suppliers. One Korean supplier summarized the resulting market simply: without China, there are few choices, while Japan is expensive.

Terafab reportedly wants prices below those available from China, challenging Korean manufacturers to deliver Chinese-level pricing while meeting demanding qualification, service and delivery requirements in Texas. For suppliers, the commercial opportunity could be substantial, but participation may require tight margins and early investment before production volumes are assured.

Established global vendors are mobilizing too. Lam Research ($LRCX) and Applied Materials ($AMAT) have reportedly created dedicated Terafab teams. Fujifilm is meeting Terafab buyers regularly regarding slurries, photoresist and etchants. Those discussions indicate Terafab is not merely sourcing tools. It is assembling the broader process ecosystem required to run a fab.

The scale is ambitious: $16.8 billion in initial investment, more than 3,000 jobs and a target of 1 million wafer starts per month within 10 years. SpaceX broke ground in Grimes County, Texas this month, while the first phase, designed for 100,000 wafer starts per month, is expected before 2030.

For context, the U.S. government’s semiconductor policy, administered through the NIST CHIPS for America program, is intended to expand domestic manufacturing capacity and strengthen supply chains. Terafab’s plan fits that broader direction, although its reported scale and operating model place it in a category of its own.

The manufacturing architecture also appears to be divided by chip type. Logic work is being done with Intel ($INTC), discussions with TSMC ($TSM) remain underway, and memory production will be developed separately. That division could allow Terafab to combine outside process expertise with captive capacity, rather than attempting to internalize every capability at once.

Still, supplier discussions and NDAs are early indicators, not purchase orders. Semiconductor equipment can take months or years to qualify, and material substitutions may require extensive testing. A single R&D tool from HPSP, for example, establishes a foothold without confirming the eventual production footprint.

One supplier said emails sent to Terafab in the middle of the U.S. night receive replies within 30 minutes to an hour. That pace may help Tesla and SpaceX assemble a candidate supply base quickly. The harder phase comes next: converting fast conversations into validated processes, dependable volumes and economics that Korean suppliers can sustain.