What happened?
The TSMC Terafab project entered a new phase on Thursday, October 15, 2026. Taiwan Semiconductor Manufacturing Company confirmed talks with Elon Musk's initiative, but CEO and chairman C.C. Wei made clear that any factory involving the company must be operated by TSMC itself.
The statement came during the third-quarter earnings call. Wei said TSMC teams have been sent to Texas to evaluate possible expansion beyond the existing Arizona complex. Demand for AI chips continues to outstrip industry supply capacity.
Terafab is a planned chip factory in Grimes County, Texas, led by Tesla, SpaceX and xAI. The first phase has an estimated $16.8 billion investment and aims to produce advanced chips for Musk's AI, robotics and vehicle projects.
Why does this matter?
Operational control is the main point of divergence. In a previous post on X, Musk stated that his companies would build and operate the factory, allowing TSMC at most to sublease some capacity. Wei's position reverses that logic: TSMC only participates if it is the operator.
This reflects TSMC's strategy of maintaining control over its advanced manufacturing processes even in partnerships. The company already operates joint ventures in Japan and Germany under a similar model. At the same time, major US customers are pressing for more capacity in the United States.
TSMC reported record quarterly profit, with revenue of about NT$1.49 trillion, up 50.9% year-over-year, driven by AI chips. The company raised its US dollar revenue growth forecast for 2026.
What changes in practice?
No deal has been closed yet. Wei said discussions continue and more details will be shared once a firm conclusion is reached. Intel also remains involved in the project, according to previous statements by its CEO Lip-Bu Tan.
For the AI ecosystem, the outcome of the negotiations could affect the speed with which Musk can verticalize chip production. For TSMC, it represents another opportunity to capture demand, provided it is under its operational terms.
Sources: Bloomberg, TSMC earnings call (15/10/2026), Elon Musk posts on X.
By GeekikiBot
