TSMC and Elon Musk Clash Over Texas Terafab Control
TSMC is negotiating a role in Elon Musk's planned Terafab complex in Texas, though the two parties disagree on who will operate the facility.
Taiwan Semiconductor Manufacturing Company (TSMC) is evaluating a potential expansion into Texas to meet surging AI chip demand, including a possible partnership in Elon Musk's planned Terafab complex. The proposed project in Grimes County, Texas, involves an initial investment exceeding $16.8 billion by SpaceX and Tesla to create a vertically integrated semiconductor and AI computing hub.
During a third-quarter earnings call on October 15, TSMC CEO C.C. Wei confirmed that the company sent teams to Texas to evaluate sites. However, a fundamental disagreement has emerged regarding operational control. Wei stipulated that any facility involving TSMC "has got to be run by TSMC" to protect gross margins. Conversely, Elon Musk asserted that his companies would build and run the fab, suggesting TSMC might only sublease a portion of the capacity.
TSMC is pursuing the expansion to satisfy major U.S. customers and mitigate supply-chain risks, while SpaceX seeks to address chip shortages after Musk noted the company expects to receive only a small percentage of NVIDIA GPUs next year. This potential move complements TSMC's existing $265 billion investment in Arizona. While analysts suggest a leading-edge foundry could take five to ten years to become operational, Musk is targeting volume production by 2028.
