TSMC Weighs Joining Musk's Texas Chip Fab; Intel Falls 2.4%
Monday, October 58 Min Read
Musk confirmed talks for TSMC to take a role in his Terafab project, where Intel had been the only manufacturing partner since April. On Monday TSMC hit records in Taiwan and New York, while Intel fell 2.42%.
$486.12
TSM ADR Close on a Record Day
-2.42%
Intel's Monday Close
$293M
Intel Foundry's Quarterly Outside Revenue
$2.1B
Intel Foundry's Quarterly Operating Loss
In This Piece7 Sections
On Saturday morning, Elon Musk posted a single sentence on X.
"Just discussions, but something may come of it."
On Monday, TSMC shares hit a record in Taipei. In New York, Intel fell.
The same sentence moved two companies in opposite directions.
What Terafab Is and Why Intel Is In It
Musk unveiled Terafab in Austin on March 21. The goal is to make the AI chips that Tesla, SpaceX and xAI need in a fab of his own: a terawatt of compute a year.
The project has two stages. A small prototype fab sits in Austin. The main plant is planned for Grimes County, Texas, with construction due to start on December 1, 2026 and finish by the end of 2028. County filings put the cost of all phases at $55B to $119B.
Intel joined the project in early April. A few weeks later, Musk said the fab would use Intel's 14A process, which is not yet complete.
Since then, Terafab has been the most visible outside-customer story in Intel's foundry business.
What TSMC Said in April
TSMC CEO C.C. Wei gave an indirect answer to Terafab on the company's April 16 earnings call.
"No shortcuts." In Wei's telling, building a new fab takes two to three years, and ramping it takes another one to two.
Musk replied two days later. He wrote that TSMC could not make enough chips, and that if it could, Terafab would not be needed.
Six months later, both sides are at the table.
How the Story Unfolded
Tim Culpan's Culpium newsletter first reported the talks on October 2. Culpan said the most likely scenario has TSMC owning and operating the new fab. SpaceX and Terafab would take equity and commit in advance to buying part of the output.
The second option runs the other way. SpaceX keeps the majority, while TSMC puts in less capital but brings process technology and operating know-how.
TSMC declined to comment. There is no signed agreement, no disclosed amount and no board decision.
Timeline
- March 21Musk unveils Terafab in Austin.
- Early AprilIntel joins; Musk says the fab will use 14A.
- April 16C.C. Wei says there are no shortcuts to building a fab.
- October 2Culpium reports TSMC is exploring work with Terafab.
- October 3Musk confirms the talks on X.
- October 5TSMC hits records in Taiwan and New York; Intel falls.
- October 15TSMC reports third-quarter results.
The Market Did Not Read This as a New Partner
It read it as a loss of bargaining power for Intel.
A fab's economics depend on how many wafers it runs. A wafer is the silicon disc that chips are printed on.
Intel's numbers show why this math matters. Its foundry unit posted a $2.1B operating loss on $5.8B of revenue in the second quarter.
Most of that revenue comes from Intel's own products. Outside customers contributed $293 million, about 5%.
In a business built like that, one large outside customer means utilization, not just price. Musk's talks with TSMC showed that utilization is not guaranteed.
The Chip Sector Split
The Nasdaq rose 1.05% on Monday to a record close. Chip stocks did not move together.
TSMC's Taiwan-listed shares rose 3% to a record close of NT$2,575, and the Taiex gained 2.55%. Its New York ADR hit an intraday all-time high and closed at $486.12.
SpaceX shares also rose. But Morgan Stanley reiterated its $300 target the same day, so the move cannot be pinned on Terafab alone.
The Nasdaq 100's past month, tracked by QQQ, shows the split happened in a rising market.
Intel's drop had a second driver. Susquehanna estimated that Intel's laptop CPU share fell 3.9 points to 68.1% in the third quarter.
The chart frames Intel's run since it joined Terafab in April; it does not show that one headline set the price.
The Part That Does Not Fit
Musk's comments do not shut Intel out. According to reports, he said TSMC would supplement Intel rather than replace it; we could not verify the original post.
Intel has no disclosed capital commitment tied to Terafab either. According to its filings, specific projects are subject to separate negotiations.
The U.S. government owns roughly 10% of Intel. We found no statement on the talks from the White House or the Commerce Department.
What Is Left
TSMC reports third-quarter results on October 15. What management says about Terafab or a possible second Texas hub on the earnings call will set the weight of Saturday's sentence.
For Intel, the question is simpler: which outside customer besides Musk will sign up for 14A?
This article is based on Culpium's October 2 and 3 reports, Musk's post on X, reporting by Tom's Hardware, TrendForce, DCD and Quartz, Focus Taiwan's Taiex closing report, Semiecosystem's account of Intel's second-quarter results, and October 5 closing data. The Terafab cost range comes from press reports on county filings. TSMC declined to comment on the talks.
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