Elon Musk said on 7 October that his companies would build and operate Terafab independently, ruling out TSMC running the Texas chip venture, Bloomberg reported.
Key points
- Musk said TSMC could potentially take space at Terafab but would have no role in operating the plant.
- The project plans two factories and targets one terawatt of annual computing capacity.
- Intel, which joined in April, remains Terafab’s only named chipmaking partner.
TSMC’s potential role is limited to space
Bloomberg described the arrangement still under consideration as TSMC potentially leasing part of the planned site. Breaking the News quoted Musk as saying TSMC could “sublease part of the facility” but “nothing more than that”. Neither version gives the chipmaker an operating role.
“No, we will build and run the fab,” Musk wrote on X, according to Breaking the News. His statement narrows the potential involvement of a chip manufacturer that had been discussed as a possible participant in running Terafab’s planned plants.
Terafab involves Tesla, SpaceX and xAI, Breaking the News reported. One of its two planned factories would make chips for Tesla vehicles and humanoid robots. The other would support AI data centres in space. The project targets one terawatt of annual computing capacity.
Intel’s 14A process remains in Terafab’s plans
Intel announced on 7 April that it was joining Terafab alongside SpaceX, xAI and Tesla, The Motley Fool reported. It has been the project’s only named chipmaking partner. Later in April, Musk said on a Tesla earnings call that Terafab planned to use Intel’s 14A manufacturing process.
Intel pointed to its ability to design, manufacture and package chips at scale when it announced its participation. Its chief executive, Lip-Bu Tan, said in prepared remarks for the company’s first-quarter 2026 earnings call that Intel was exploring ways to work on silicon process technology with the venture.
The project’s first stage in Grimes County, Texas, carries a planned investment of over $16.8 billion, The Motley Fool reported. The publication also reported that Intel had not disclosed financial terms for its involvement. Its account of SpaceX’s May filing to go public described a framework agreed with Tesla, with individual projects subject to separate agreements.
According to that account of the filing, neither Tesla nor Intel is obliged to remain in Terafab. Intel’s proposed 14A role therefore sits alongside a framework under which participation in particular projects requires further agreement.
Musk’s 3 October talks moved Intel shares
Musk had confirmed discussions with TSMC on 3 October. “Just discussions, but something may come of it,” he wrote on X, according to The Motley Fool. His statement on 7 October rules out the operational arrangement that had become a concern for investors in Intel.
AI Affairs reported that Intel shares fell more than 4% after Musk confirmed the TSMC talks. The proposed use of Intel’s 14A process had put the chipmaker at the centre of Terafab’s manufacturing plans. Musk’s latest statement leaves TSMC with only a potential property arrangement at the site.
