Elon Musk has confirmed talks with TSMC about a chip plant built just for his companies.
Musk confirmed on X early Saturday that discussions with TSMC are underway, after Tim Culpan's Culpium newsletter first reported that the two sides are discussing a facility exclusively supplying Tesla, SpaceX, and xAI. Musk offered nothing beyond "something may come of it." Culpan's sourcing lays out two possible structures: one where TSMC owns and operates the fab while Terafab invests or commits to buying a set volume of chips, similar to TSMC's joint ventures in Japan and Germany, and another, more unusual option where SpaceX holds majority ownership and TSMC supplies only process technology and operational expertise. Separate reporting on TSMC's rumored Texas fab complex suggests that project is tied to supporting Terafab.
The sticking point is Intel, which is currently set to supply its 1.4nm-class 14A process for Terafab's chips. If TSMC brings its own node into the deal, Intel's part could disappear entirely. There's also a patent angle: Terafab has no cross-license with TSMC the way Intel does, so building chips on an Intel-developed process without TSMC's blessing could expose Terafab to infringement claims.
None of this means Musk wants Terafab to compete with Intel Foundry, Samsung, or TSMC as a merchant chipmaker. He just wants a steady, oversupplied stream of custom silicon for cars, rockets, and AI chips, and if partnering with the industry's biggest foundry gets him there faster than relying on Intel alone, he will take it.