HAWTHORNE, Calif. — SpaceX and Taiwan Semiconductor Manufacturing Co. have revived discussions over "Terafab," an advanced chip-fabrication venture that could give Elon Musk's company a path to building its own AI silicon alongside partners Tesla and Intel, according to a report from DigiTimes that Musk partly confirmed on X over the weekend.
The talks signal that one of the most ambitious manufacturing ideas in Musk's orbit is back in motion, as SpaceX races to feed the enormous appetite for computing power behind its AI and orbital-data-center plans.
What Terafab Would Build
Terafab is envisioned as a large-scale fabrication plant dedicated to the custom processors that train and run SpaceX's AI systems — the same demand curve Musk pointed to when he called Earth's conventional data centers "peanuts" next to what he intends to put into orbit.
According to the DigiTimes report, the revived discussions cover operational control, joint investment, process technology and advanced packaging — the last a well-known bottleneck in supplying cutting-edge AI chips. A first test chip is now targeted for around May or June 2027, with volume production penciled in for the third quarter of 2028.
The Control Question
The sticking point has long been who runs the plant. TSMC's chief executive has said publicly that any fab the company participates in must be operated by TSMC, while Musk has insisted SpaceX intends to control its own manufacturing destiny.
"No, we will build and run the fab," Musk wrote, leaving "zero doubt" about his intentions. Even so, people familiar with the talks suggest Musk may be prepared to soften his demand for full control in exchange for TSMC's unmatched process expertise — a pragmatic compromise that could get shovels in the ground faster.
Why It Matters for SpaceX
Bringing chip production closer to home would address SpaceX's single biggest constraint: securing enough high-end silicon to keep scaling its Colossus training clusters, whose latest expansion added two new buildings nicknamed "Gun Range" and "Spam". Musk has set a target of roughly 1.2 million Nvidia Blackwell chips online by the end of this year, and a dedicated fab would give the company leverage over cost, supply and design for the generations after that.
For now, Terafab remains a negotiation rather than a signed deal, and earlier reporting put the venture's initial price tag near $16.8 billion. But the fact that SpaceX and TSMC are once again at the table — with concrete 2027 and 2028 milestones on the whiteboard — suggests Musk's push to vertically integrate the AI stack, from rockets to orbit to the processors themselves, is gathering real momentum. Further detail on the overnight developments was reported by markets coverage of the SPCX move.
