"Korean MCE Firms Secure Major Stake in Elon Musk's $119 Billion 'Terafab,' Set to Consume Twice Entire US Power"

Terafab Breaks Ground on a Site 3.2 Times the Size of Yeouido
Major Orders Loom for Korean Front- and Back-End Equipment Companies
HPSP, Hanmi Semiconductor, and Others Secure Key Roles in Supply Chain

With the groundbreaking of Elon Musk's 'Terafab', which aims for in-house procurement of artificial intelligence (AI) chips, Korean semiconductor equipment companies are now seeing substantial opportunities for new orders. As the 'Musk ecosystem'—lacking experience in semiconductor manufacturing—selects Korean materials, components, and equipment (MCE) companies with proven technology as initial partners, expectations are rising for long-term benefits.

According to industry sources and foreign media on October 3, SpaceX recently signed a contract with the state of Texas in the United States for property tax reductions and economic development, commencing construction of Terafab. The total manufacturing space (gross floor area) of Terafab is about 9.3 million square meters—3.2 times the size of Yeouido. Upon completion, total investment is estimated to reach up to $119 billion (approximately KRW 165 trillion).

Terafab line construction site near Gigatex, Growth Research

Terafab is a large-scale semiconductor vertical integration project jointly pursued by Tesla, SpaceX, and xAI, all led by Elon Musk. The plan is to comprehensively process everything from semiconductor manufacturing to advanced packaging and testing at a single site, to address both AI chip shortages and growing computing demand from big tech (leading information technology companies). Uniquely, Terafab defines its annual production capacity not by wafer input, as is common for semiconductor fabs, but by the power scale of completed AI computing systems: '1 TW (terawatt)'—twice the current average total power consumption of the United States (0.5 TW).

Although construction is only in its initial phase and the framework has yet to be erected, Korean MCE companies are quickly securing opportunities by claiming key positions in the supply chain.

In front-end processes, HPSP, which holds a monopoly on high-pressure hydrogen annealing (HPA), made the first breakthrough. HPSP has confirmed delivery of high-pressure hydrogen annealing test equipment in the first half of next year to the pilot research fab being established by Tesla near its main plant in Austin, Texas. HPA is a core front-end technology; it injects hydrogen under high temperature and high pressure to repair interface defects in ultra-fine semiconductor transistor gates, thereby improving yields.

For back-end (advanced packaging), Hanmi Semiconductor, the world's top company for thermal compression (TC) bonders, has taken the lead. Terafab has adopted Intel's advanced packaging technology, EMIB, as its core architecture, and Hanmi Semiconductor is being mentioned as the supplier of bonders for this EMIB packaging. In the past, Hanmi Semiconductor strategically invested KRW 50 billion during the IPO stage of SpaceX, solidifying their partnership. To prepare for forthcoming large-scale orders, Hanmi Semiconductor is investing KRW 130 billion in expanding its Plant 8 at the Juan National Industrial Complex in Incheon. 

Additionally, other domestic MCE companies within Intel’s supply chain—including Park Systems, which specializes in nano metrology equipment, and PSK, which focuses on front-end etching equipment—are also being considered as beneficiaries of the Terafab project.

Yonghee Han, a researcher at Growth Research, analyzed, "Given the Musk ecosystem’s lack of semiconductor manufacturing experience, it’s highly probable that they will prioritize top-tier equipment with verified technological performance and mass production stability over price, to minimize trial and error. Equipment makers with Intel process experience have an advantage, and those selected as suppliers from the pilot phase are likely to secure large-scale, long-term orders."

An industry insider said, "Competition for leadership in the AI industry is now extending into a vertical integration race to directly control semiconductor production capacity. The Terafab project, backed by large-scale capital investment and guaranteed internal demand, presents unprecedented order opportunities for both front- and back-end equipment providers responsible for establishing the initial processes."

This content was produced with the assistance of AI translation services.