Elon Musk has said his companies will build and operate Terafab, their planned chip plant in Texas, themselves, and that Taiwan Semiconductor Manufacturing Co. could at most lease part of the site, the Taipei Times reported, citing Bloomberg. Separately, Intel CEO Lip-Bu Tan said Intel will remain involved in the project.

What Happened

In a post on X, Musk pushed back on reports that TSMC might take an operating role in Terafab, the joint chipmaking effort of Tesla, SpaceX and xAI. He wrote that TSMC could sublease part of the facility "if they want, but nothing more than that." The plant is meant to supply advanced chips to Musk's own companies.

Tan, speaking to Bloomberg ahead of a Tuesday event in Tokyo marking Intel's 50 years in Japan, said Intel is helping develop technology for Terafab and will continue to be part of the effort. TSMC did not immediately respond to a request for comment, according to the report.

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Why It Matters

Musk's post walks back the most ambitious version of a TSMC tie-up. As we reported Oct. 3, Musk had confirmed that Terafab was in early discussions with TSMC after Tim Culpan's Culpium newsletter said the foundry was exploring ways to help run new Texas fabs. The structure Culpan considered most likely would have had TSMC own and operate a plant, with Musk's companies investing or committing to buy chips.

That model would have put Intel's role in question. Intel joined Terafab in April and is slated to supply its 14A manufacturing process, and Tom's Hardware noted at the time that a TSMC-run plant would bring TSMC's own process instead. Tan's comments, together with Musk's insistence on running the plant in-house, suggest Intel's position is intact for now, although neither company has detailed how its support for 14A at Terafab will work, including whether Intel engineers will help bring production up to volume.

Keeping operations in-house also means Musk's companies carry the execution risk. Leading-edge fabs take years to build and qualify, and TSMC's appeal as a partner was its experience ramping new nodes at scale. A sublease would give TSMC space at the site but, as Musk described it, no part in running Terafab's own production.

Context

Terafab was announced in March as a way to secure chip supply for vehicles, humanoid robots, AI data centers and space hardware, with Musk arguing that existing foundries cannot produce enough for his companies' plans.

Texas is becoming crowded with chipmaking projects. TSMC is separately weighing a large chipmaking campus of its own in the state, on top of its multiyear expansion in Arizona, and Samsung Electronics is building a plant in Texas, according to the Bloomberg report.

What to Watch

TSMC's quarterly earnings call this month is the next chance for the company to address the talks and its Texas plans. Further details from Intel or Terafab on the 14A arrangement, such as licensing terms or Intel's on-site role, would show how deep the partnership runs. Whether TSMC takes up a sublease at all remains open.