Key points
▶ On Oct. 4 (local time), Tesla and SpaceX CEO Elon Musk shared a report on X that TSMC was exploring a partnership on Terafab, writing, “It’s just at the discussion stage, but something may come of it.”
▶ Terafab is a large semiconductor factory that Tesla and SpaceX are building in Texas. When the project was announced in March, its goal was to produce chips equivalent to one terawatt of AI computing capacity annually. The plan is to make chips in-house for the Optimus humanoid robot, robotaxis and space data centers.
Elon Musk himself has raised the possibility that TSMC could join Terafab, the massive semiconductor factory he is building. Intel had been seen as the project’s exclusive partner. Intel shares fell, while TSMC stock surged to a record high.
On Oct. 4 (local time), Musk, the CEO of Tesla and SpaceX, shared an article on X reporting that TSMC was considering ways to work with Terafab. “It’s just at the discussion stage, but something may come of it,” he wrote.
◆ Terafab: a chip factory Musk is building himself
Terafab is a large semiconductor factory project led by Tesla and SpaceX. When Musk announced the plan in Austin, Texas, in March, he set a goal of producing chips equivalent to one terawatt of AI computing capacity annually.
That is where the name Terafab comes from. The idea is to produce in-house, rather than outsource, the AI chips for Tesla’s Optimus humanoid robot and Cybercab robotaxi, as well as SpaceX’s space data centers.
The factory will be built in Grimes County, Texas. The first phase carries an investment of $16.8 billion (about 23.3 trillion won). Construction is scheduled to begin in December, with completion targeted for the end of 2028.
Intel’s participation was announced in April. The company agreed to provide its cutting-edge 14A process technology and manufacturing expertise. Until now, 14A was the only process technology publicly associated with Terafab. Intel was viewed as the project’s biggest beneficiary, and its stock rose after the announcement.
◆ Intel falls 2.65% after TSMC enters the picture
The situation shifted with a single post from Musk. The newsletter Culperium reported exclusively on Oct. 2 that TSMC was considering a partnership with Terafab. Musk shared the report on Oct. 4, confirming that discussions were taking place. Intel shares fell 2.65% on Oct. 5.
TSMC’s American depositary receipts (ADRs) rose 2.7% to a record closing price of $485.80 per share. Intel shares fell another 2.6% during trading on Oct. 6.
There is another possible interpretation: Musk may have deliberately brought up TSMC to strengthen his hand in price negotiations with Intel.
Luke Lavan, CEO of Equity Armor Investments, told MarketWatch that, given the U.S. government’s investment in Intel, “it’s hard to see Intel being replaced to any significant degree.”
For TSMC, the development would align with its broader expansion of investment in the United States. The company has pledged to invest $265 billion in Arizona. Joining Terafab would give it a foothold in Texas as well. As Musk put it, whether “something may come of it” remains at the discussion stage.