Musk Confirms Tesla and SpaceX Will Control $119B Terafab AI Chip Complex, Rejects TSMC Ownership

Musk Asserts Direct Control Over Terafab Operations

Elon Musk moved decisively on Wednesday to end speculation about Taiwan Semiconductor Manufacturing Company's role in the Terafab AI chip complex1

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. Writing on X, Musk declared that his companies "will build and run the fab. Let there be ZERO doubt about that," limiting TSMC involvement to a possible sublease arrangement3

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. The statement came after a week of uncertainty triggered by reports that TSMC was exploring using Terafab as an anchor client for a future Texas semiconductor production facility. Musk had acknowledged those discussions on Saturday, posting that they were "just discussions, but something may come of it"1

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. However, his Wednesday clarification left no ambiguity about operational control remaining with Tesla and SpaceX2

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Market Reaction Reflects Strategic Implications

The clarification triggered immediate market responses. TSMC's ADR shares fell 1.3% in pre-market Wednesday trading, while Intel gained 1.6% after sliding 3.2% on Tuesday amid fears it could be sidelined from the project1

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. Intel CEO Lip-Bu Tan confirmed to Bloomberg News that the company would remain involved in the project3

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. For Intel, this resolution carries significant weight beyond surface appearances. The company's external foundry revenue totaled just $293 million in Q2, making Terafab one of its most visible foundry wins1

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. Intel joined as the sole named manufacturing partner in April, with its next-generation 14A process node designated as the facility's only identified technology, serving as a strategic anchor for Intel's foundry ambitions1

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Terafab's Massive Scale and Strategic Purpose

Terafab represents a Tesla-SpaceX joint venture in Grimes County, Texas, targeting more than one terawatt of annual AI compute capacity1

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. The AI chip complex aims to supply Tesla's Optimus robots, Cybercabs, SpaceX space-based data centers, and xAI with necessary chip manufacturing capabilities1

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. The initial investment stands at $16.8 billion, with total potential spending across all phases reaching up to $119 billion and a planned workforce of at least 3,0001

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. This scale positions Terafab as one of the most ambitious AI chip production facilities planned in the United States, designed to meet the growing artificial intelligence needs of both Tesla and SpaceX2

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Partnership Dynamics Remain Fluid

While Musk categorically ruled out TSMC owning or operating the Terafab AI chip complex in Texas, he left open the possibility that TSMC could sublease part of the facility2

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. The exact form this partnership could take remains unclear, with no further details provided about the sublease arrangement. Musk continues to evaluate partners that could contribute to developing the complex's AI chip production capacity2

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. The possible arrival of TSMC involvement could alter the division of roles among various players, though Intel's position as manufacturing partner appears secure for now2

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. Neither TSMC nor Intel immediately responded to requests for comment on the evolving partnership structure3

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. Watch for further announcements about the final partnership configuration and how the 14A process node will integrate with any potential TSMC sublease arrangement as the project advances toward construction.