Elon Musk has dismissed suggestions that Taiwan Semiconductor Manufacturing Co. will operate his Texas chipmaking venture, Terafab, stating that his companies will build and run the facility independently. The clarification comes as Intel continues its development partnership on the project amid fluctuations in its stock price.
The planned Tesla-SpaceX project in Texas aims to construct a massive chip fabrication complex dedicated to artificial intelligence hardware. Speculation regarding the facility’s operations intensified after Musk mentioned potential cooperation with Taiwan Semiconductor Manufacturing Co., leading observers to question the future of Intel’s involvement as the initial development partner joined in April.
Musk Limits Taiwan Semiconductor Role
Speculation over who would manage the massive infrastructure arose following reports that Taiwan Semiconductor Manufacturing was exploring ways to assist with running the planned Texas plants. Musk addressed the rumors directly on social media, clarifying that any association with the major chipmaker would be strictly limited to real estate arrangements rather than factory management.
“No, we will build and run the fab. Let there be ZERO doubt about that.”
Elon Musk
Musk added that the only possibility involving the firm would be leasing space at the site.
“Maybe TSMC subleases part of the Terafab if they want, but nothing more than that,”
Elon Musk
Three Musk companies sit behind the venture: Tesla, SpaceX, and xAI. Advanced semiconductors produced at the plant are intended to fulfill the demands of Musk’s corporate network, encompassing the Tesla automotive and robotics operations alongside the combined SpaceXAI entity, which houses space exploration technology and the Grok-focused xAI division. Earlier, Musk noted that SpaceX and Tesla would need as many as 200 billion AI chips per year because current partners could not make enough of the required chips. While Musk had recently indicated he was in discussions with TSMC, he clarified in an X post that the only matter under consideration is for TSMC potentially leasing some part of the planned site without involving any operational role. According to a client note from Oppenheimer analyst Rick Schafer, an alternative approach involves TSMC building and operating a dedicated fabrication plant solely for Tesla, SpaceX, and xAI, coupled with investment or volume commitments from SpaceX. Luke Rahbari, CEO of Equity Armor Investments, suggested Musk’s comments could be a way to negotiate down with Intel, noting that he has a hard time believing Intel will be replaced in any significant way because the U.S. government has investments in Intel while SpaceX depends on government contracts. Barbara Kollmeyer and Britney Nguyen reported that Terafab could use both chip manufacturers, as dual-sourcing is standard practice in semiconductors.
Intel Confirms Terafab Development Work
Amid market speculation, Intel Chief Executive Officer Lip-Bu Tan confirmed that the US chipmaker will continue its work on the venture. Intel originally joined the project on April 7, 2026, alongside SpaceX, xAI, and Tesla, bringing its ability to design, fabricate, and package ultra-high-performance chips at scale.
The facility’s first stage in Grimes County, Texas, carries a planned investment exceeding $16.8 billion, with ambitions to scale toward a production target of 1 terawatt of computing capacity annually across multiple phases that could see total spending reach up to $119 billion. While market observers noted that Intel shares experienced downward movement following initial reports of talks with Taiwan Semiconductor, analysts point out that Terafab serves primarily as a high-profile validation test for Intel’s advanced manufacturing processes rather than an immediate revenue pillar. Intel CEO Lip-Bu Tan stated during prepared remarks for the company’s first-quarter 2026 earnings call that the firm is excited to explore innovative ways to refactor silicon process technology. Intel’s foundry took in $293 million from outside customers in the second quarter of 2026 compared to $22 million in the same period of 2025, though $181 million of that total came from Altera, a chip business Intel sold a 51% stake in last year. Without disclosed financial terms or a defined scope, Intel’s exact share of a project that could eventually reach up to $119 billion remains an open question as market participants watch for future Tesla earnings calls to see if the automaker continues pointing to Intel’s process.
