TSMC Confirms Terafab Talks, Says the Fab Has to Be Run by TSMC

Image: Tesla

TSMC has confirmed it is in discussions about Elon Musk’s Terafab chip project, and its CEO says the fab has to be “run by TSMC.” That’s according to C.C. Wei on the company’s third-quarter earnings call on Thursday. Asked about Texas, Wei said TSMC has sent teams there to look at expanding outside Arizona, and that it is talking with a customer building Terafab about whether TSMC could use that capacity. He called the talks unfinished, saying “we are still in discussion” and “if we have any solid conclusion, we will share with you,” so nothing has been signed.

The “run by TSMC” line came when an analyst asked whether all of this would be TSMC-run fabs rather than TSMC becoming part of the Terafab project. In a separate answer about customers passing wafer allocations to one another, Wei said TSMC does not allow customers to sublet or auction off capacity. That answer was about wafer supply in general and never mentioned Terafab, so it shouldn’t be read as a direct reply to Musk.

Still, the “run by TSMC” line sits at odds with what Musk wrote last week. On October 7 he said, “No, we will build and run the fab,” and that TSMC might sublease part of Terafab “if they want, but nothing more than that,” as we covered in our Terafab update. That came four days after he confirmed the TSMC discussions were “just discussions, but something may come of it,” in our earlier TSMC talks report. Musk wants his companies in charge of the plant while Wei wants TSMC to run the fab, and neither side has said how that gap would close.

Terafab has moved quickly for a project of its size. Tesla and SpaceX broke ground in Grimes County, Texas, on August 6 with a $16.8 billion first phase for a site of more than 100 million square feet that is meant to make, package and test advanced logic and memory chips in one place. Intel joined the effort in April, and the chips are meant to power Optimus robots, the Cybercab and SpaceX’s planned space-based data centers.

TSMC’s own US footprint is still growing too. On the same call, Wei said TSMC has finished building its second Arizona fab and is installing tools, with volume production starting in the third quarter of 2027, slightly ahead of the earlier schedule. With Texas now on the list of places TSMC is looking beyond Arizona, the question of who runs Terafab is more than a formality.

Do you think Musk will let TSMC run part of Terafab, or will Tesla and SpaceX keep the whole plant in house?