Elon Musk has settled the question of who will operate Terafab, his planned AI chip factory in Texas. The answer is Tesla and SpaceX, not Taiwan Semiconductor Manufacturing Co. In an October 7, 2026 post on X, Musk said his companies will construct and manage the facility in Grimes County, Texas, on their own. TSMC, the world’s go-to contract chipmaker, gets no operational seat at the table. It might rent a corner of the building. “No, we will build and run the fab.” — Elon Musk
What Musk actually said about TSMC
The chatter started around October 2 and 3, when talk surfaced of preliminary discussions between Musk and TSMC.
Investors quickly began asking whether the Taiwanese giant would help run the project. Musk’s clarification draws a firm line.
Tesla and SpaceX will own the build and the day-to-day operations. The only TSMC scenario he left open was the chipmaker potentially subleasing part of the facility. He did not slam the door entirely, though. Musk characterized the earlier talks with TSMC as mere conversations that could still lead somewhere, stating they were “just discussions, but something may come of it.”
Meanwhile, a different chip company already holds a confirmed role.
Intel is the manufacturing technology partner for Terafab, supplying its proprietary 14A process node. The company has reaffirmed its commitment to the venture. The scale of the Terafab bet
Terafab is not a modest side project. The facility is designed to deliver one terawatt of annual AI computing capacity.
The first phase alone carries a projected investment of $16.8 billion. Musk first unveiled the project in March 2026. His stated reasoning centers on supply.
He believes the world’s foundries will not have enough capacity to meet coming demand from autonomous vehicles, humanoid robots, and large-scale AI workloads. Three Musk-linked operations sit at the center of that concern.
Tesla needs chips for its vehicles. SpaceX needs them for its operations. And xAI needs enormous compute to keep developing its Grok AI model.
What this means for TSMC, Intel, and the chip race
For TSMC investors, the company will not operate Terafab, which removes one potential revenue stream from the speculation of recent days. A possible sublease keeps TSMC physically inside the project, and Musk’s own description of the talks suggests further collaboration could still emerge. TSMC is also separately exploring a new chipmaking campus in Texas to expand its American footprint, putting it in the same state as Terafab.
For Intel, its confirmed role as technology partner, built around the 14A node, gives it a high-profile customer at a time when it is working to prove its foundry ambitions. There are a few things worth tracking from here: whether any sublease agreement between Tesla, SpaceX, and TSMC actually materializes; how quickly Terafab’s $16.8 billion first phase moves from plans to production; and whether TSMC formally commits to its own Texas campus. Disclosure: This article was edited by Diego Almada Lopez. For more information on how we create and review content, see our Editorial Policy.
