Christophe Fouquet, the CEO of lithography giant ASML Holding NV (NASDAQ: ASML), stated on Wednesday that the chip equipment manufacturer must avoid supply shortages when servicing new projects like Elon Musk's Terafab.

When asked about the new business from Terafab, Fouquet remarked, "New projects are opportunities, as long as supply is not constrained. So we have to make sure that is really well taken care of, but I think Terafab is an example of a large fab project."

Speaking on the sidelines of the Vivatech conference in Paris, Fouquet also noted that demand for artificial intelligence (AI) infrastructure "remains huge" and explored the potential of space-based data centers.

Last week, Elon Musk, CEO of Tesla Motors (NASDAQ: TSLA) and SpaceX, participated via video link at ASML's annual technology conference, engaging in discussions with Fouquet and ASML staff. SpaceX had just completed the largest initial public offering in history a few days prior.

Fouquet confirmed last month that he had discussed the Terafab project with Musk, describing it as a "serious undertaking." He warned at the time that surging AI demand would lead to long-term capacity shortages in the global semiconductor industry, with large-scale projects like Terafab continually straining equipment manufacturers' supply capabilities.

Reports indicate that ASML stated this month it will participate in Musk's ambitious Terafab project, which aims to produce sufficient semiconductors to meet the needs of Musk's companies.

According to official documents, SpaceX initially proposed investing $55 billion to launch the highly anticipated Terafab semiconductor plant in Austin, Texas.

The facility is intended to produce cutting-edge chips for robotics, artificial intelligence, and space data centers.

As outlined by Musk, Terafab is ultimately designed to independently mass-produce logic and memory chips at the 2-nanometer node and beyond, with the goal of completely eliminating reliance on external foundries like TSMC.

Fouquet mentioned that ASML is currently evaluating the project's progress and the speed of its advancement.

ASML is the world's sole manufacturer of extreme ultraviolet lithography equipment, with clients including leading chipmakers such as TSMC, Samsung, SK Hynix, and Intel.

If Terafab proceeds as planned, it is expected to become a core purchaser of ASML's systems, potentially exceeding the scale of the company's current largest customer.