Musk Says TSMC May Join Terafab, Deepening the Tesla-SpaceX Chip Push

AUSTIN, Texas — Elon Musk has confirmed that Terafab, the ambitious Texas chip project backed by Tesla and SpaceX, is in early discussions with TSMC about bringing the world's largest contract chipmaker into the fold — a move that would sharply raise the program's odds of success.

"Just discussions, but something may come of it," Musk said of the talks, characteristically measured about a partnership that is still taking shape. He added that existing suppliers, including Samsung and TSMC, "remain important for near-term needs," a nod to the reality that Terafab's own output is still years away.

A Factory Built for AI Compute

Terafab, first announced in March 2026, is designed to guarantee a steady flow of advanced chips for Musk's companies rather than to compete as a general-purpose foundry. The first phase carries a price tag of roughly $16.8 billion, with total investment potentially reaching tens of billions across multiple stages. At full operation, the project aims to produce more than one terawatt of AI compute capacity every year — a figure that speaks to just how much silicon Tesla, SpaceX, and xAI expect to consume.

That appetite is not hypothetical. Tesla's self-driving and Optimus programs, SpaceX's orbital ambitions, and xAI's model training all run on custom and merchant silicon, and the companies' record quarterly results only sharpen the need for a secure supply.

Who Is Already In

Intel joined the Terafab effort in April 2026 and is slated to supply its 14A manufacturing process. Samsung and TSMC have both been named as important near-term partners. If TSMC formally signs on, it could bring its most advanced nodes to the project and, as Teslarati noted, potentially displace Intel's 14A technology over time.

Two structures are reportedly on the table, according to the report from Teslarati. Under the most probable arrangement, TSMC would own and operate the facility while SpaceX and Terafab invest or commit to guaranteed chip purchases. A second, more unusual option would see SpaceX hold majority ownership with TSMC operating the plant and providing its process technology.

The Bigger Picture

Terafab is the manufacturing backbone of a vertically integrated strategy that increasingly defines Musk's empire — one that stretches from data centers headed for orbit to robots on the factory floor. Controlling the chips, rather than queuing for them, is the logical next step.

TSMC has not publicly commented, and Musk was careful to keep expectations in check. But the mere fact that the industry's gold-standard manufacturer is at the table underscores how seriously the rest of the chip world is taking Terafab — and how central AI compute has become to everything Musk is building.