A sweeping semiconductor buildout proposed by Elon Musk could shift investor sentiment across the chip-equipment sector, according to a new note from Mizuho.

Mizuho TMT specialist Jordan Klein noted that Musk has “big semi fab spending plans” for a new “Terafab” designed to manufacture custom chips for Tesla, xAI and SpaceX. 

He says the plans appear “massive in terms of capex and new production tools required,” with early estimates pointing to power needs “calling for up to a terawatt” and “around 1 billion in NVDA GPUs per year.”

Klein says the project will roll out in phases, beginning with “$20B for new equipment in 2026.” 

He also highlights that Musk is pursuing in-house chipmaking because “he cannot get enough capacity” from existing foundry partners. 

“TSM is sold out, and Samsung is already manufacturing TSLA’s next-gen chip,” said Klein. “But neither would commit to spend hundreds of billions to expand capacity for data centers in space projects this early,” he added. 

Mizuho stresses that investor perception, and not near-term wafer-fab-equipment forecasts, is where the biggest immediate impact may lie. 

Still, the note identifies clear beneficiaries if Terafab proceeds. Klein argues “ASML would be a key beneficiary,” given the project’s expected reliance on EUV tools for “sub 2nm node capacity.” 

He adds that KLAC would be “well-positioned,” while Musk’s needs for “a lot of etch and depo and advanced packaging equipment” could also support AMAT, LRCX, TEL and potentially TER.

Klein concludes the project is “another potential call option for upside to WFE in [the] coming 3+ years,” pending funding and final plans.