ASML CEO warns of possible supply constraints on Musk’s Terafab

ASML CEO Christophe Fouquet has a message for anyone hoping the chip shortage era is winding down: don’t hold your breath.

Fouquet stated on May 20 that surging AI demand would leave the chip market “supply-limited for quite a while,” singling out Elon Musk’s TeraFab initiative as a force that could further strain an already stretched global chipmaking ecosystem.

TeraFab: Musk’s $119 billion bet on silicon

TeraFab is Musk’s vision for a massive chip fabrication facility in Texas, designed to produce the advanced semiconductors his empire increasingly depends on. The project could require an investment of up to $119 billion, a figure that would make it one of the most expensive industrial undertakings in history.

The facility is intended to serve the AI and robotics needs of Tesla, xAI, and SpaceX.

During a virtual fireside chat at ASML’s annual technology conference in mid-June 2026, Musk elaborated on TeraFab’s role in bolstering US semiconductor manufacturing. Fouquet has indicated he’s had direct discussions with Musk about the project, and described the billionaire’s commitment as serious.

ASML’s monopoly problem (or gift, depending on your seat)

TeraFab would rely on ASML’s high-NA EUV lithography systems, the most advanced chipmaking tools on the planet. Each one carries a price tag of approximately $400 million. ASML is the only company on Earth that makes them.

ASML holds a near-monopoly on the advanced lithography equipment required for manufacturing sub-5nm chips, the process nodes essential for high-performance AI processors. Every major chipmaker, from TSMC to Samsung to Intel, depends on the same Dutch company for its most critical production tools.

A facility of TeraFab’s scale would need a substantial fleet of these machines, and ASML can only produce so many per year. More buyers for a product with fixed production capacity equals longer wait times and stronger pricing power for the seller, with equipment shortages and elevated pricing power projected to extend through the end of the decade.

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