Elon Musk has said that SpaceX is in talks with TSMC regarding the former’s $16.8 billion TeraFab project in Grimes County, Texas.
Following reports from Taiwan-based journalist Tim Culpan that TSMC was exploring ways to work with SpaceX on the project, Musk replied to a user on X sharing the report, writing: “Just discussions, but something may come of it.”
TSMC rose about in morning trading, while Intel dropped about 2%.
Citing sources familiar with the situation, Culpan initially reported that discussions between the two companies were the result of plans currently being considered by TSMC to establish a presence in Texas, following the expansion of the chip maker’s manufacturing hub in Arizona.
A report from DigiTimes in late September 2026 stated TSMC was evaluating plans to build up to six advanced chip fabs in the Lone Star state.
According to Culpan, the most likely scenario would be for TSMC to own and operate a new fab in the state, with SpaceX signing on to the project with equity and/or guaranteed purchase agreements. However, prior to Musk’s confirmation of the talks, Culpan said the plans were not finalized, and other cooperation agreements were also being considered.
The proposed 'Plan A' arrangement could resemble TSMC's JASM and ESMC joint ventures in Japan and Germany, where local partners provide capital and demand while TSMC contributes process technology and operates the fabs. The proposed 'Plan B' structure — under which SpaceX will hold the majority ownership of Terafab while TSMC would operate the facility and bring its own process technology — would be completely new for the world's No.1 contract chipmaker, though.
The development certainly raises questions about Intel's role in Terafab. For now, Intel is to supply its 1.4nm-class 14A process technology to Terafab, which would produce chips for Elon Musk's SpaceX, Tesla, and xAI. If TSMC becomes involved, then Intel's 14A could drop out of the game because TSMC will bring its own node.
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