Musk Softens Stance on TSMC Role in Terafab
Tesla CEO Elon Musk may give Taiwan Semiconductor Manufacturing Co. a bigger role in the Texas chip project.
Updated on Nov. 2, 2026 in Semiconductors
Tesla CEO Elon Musk is reportedly reconsidering how much control to keep over the Terafab chip project in Texas, with TSMC possibly taking on a larger role. Digitimes reported the shift on Sunday, citing supply chain sources, and Tesla, SpaceX and TSMC did not immediately respond to requests for comment.
Why it matters
A larger role for TSMC would shift fab construction and operations toward the world's largest contract chipmaker, altering the original plan under which Tesla and SpaceX would build and run the facility. The change could reshape how Terafab is financed and staffed as Tesla pursues its own chip supply.
Musk said in April that Tesla planned to use its next-generation 14A manufacturing process at the project, and he aims for a test chip working around May or June 2027 at the Austin research fab. The final shape of the TSMC arrangement and Intel's possible role have not been disclosed.
The players
Elon Musk
Chief executive of Tesla and SpaceX who has led the Terafab chip project and recently softened his position on working with TSMC.
Taiwan Semiconductor Manufacturing Co. (TSMC)
The Taiwan-based contract chipmaker that is in talks to take primary responsibility for building and operating the Terafab fab.
Intel Corp.
The U.S. chipmaker that was the first major company publicly tied to the Terafab project, with its role now uncertain.
The details
Last month Musk said Tesla and SpaceX would build and run the fab, with TSMC at most subleasing part of the site. Talks could now move toward TSMC taking primary responsibility for fab construction and operations, and the two sides are preparing to reopen negotiations over TSMC's role. Intel was the first major chipmaker publicly tied to Terafab.
Timeline
April 2026: Musk said Tesla would use its 14A process at Terafab.
October 2026: Musk said Tesla and SpaceX would run the fab, with TSMC at most subleasing part of the site.
Sunday, November 1, 2026: Digitimes published its report on the TSMC talks.
Around May or June 2027: Target date for a Terafab test chip to be working at the Austin research fab.
Third or fourth quarter 2028: Aspirational target for Terafab volume production.
The Tech Race
Musk's October plan to keep Terafab in-house departs from the April commitment to Tesla's 14A process, and a TSMC-led fab would place the project inside the contest among chipmakers over advanced manufacturing. The shift matters as Tesla competes to secure leading-edge chip capacity for its vehicles and AI systems.
The outcome could affect how quickly Tesla gains advanced chip supply for its vehicles and AI systems, which may influence future product timelines. For drivers and buyers, the practical effect depends on whether the in-house or TSMC-led model reaches production on schedule.
The takeaway
Chip supply decisions made now can determine production timelines for years. Watching whether Tesla and TSMC finalize their terms will show how the Terafab plan takes shape.
What happens next
Tesla and TSMC are preparing to reopen negotiations over TSMC's role in Terafab, and Musk aims for a Terafab test chip around May or June 2027.
Further reading
For broader context on chip manufacturing plans, see Semiconductors coverage in Texas.
