TSMC is rumored to be exploring cooperation with Musk’s Terafab. (Reuters)
[Financial Channel/Comprehensive Report] Former Bloomberg columnist and founder of independent media Culpium, Tim Culpan, broke the news that TSMC is evaluating cooperation with Musk to assist him in the Terafab wafer fab plan to build in Texas. This project is jointly participated by Tesla (Tesla), SpaceX and xAI.
Comprehensive foreign media reports indicate that TSMC is considering Terafab as a potential major customer for its new plant in Texas. The two parties have not signed any agreement yet. However, the timing of this news is quite sensitive.
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Just the day before, on October 1, Bloomberg reported that TSMC was evaluating the construction of a second large-scale production base in the United States, possibly near Dallas. This plan will further expand TSMC’s presence in the United States in addition to the US$265 billion it has committed to building its Arizona factory.
"StartupFortune" previously reported this week that TSMC was evaluating the possibility of setting up a factory in Texas. The new development this time lies in Musk's participation. TSMC may not just abstractly look for a location to set up a factory in Dallas, but specifically consider Terafab's huge chip demand and regard it as a major customer that can support the construction of a new factory.
Musk announced the Terafab project on March 21, 2026. He said at the time that the facility would eventually have the capacity to provide 1 terawatt of artificial intelligence computing power per year. According to him, this will exceed that of all chip manufacturers in the world combined.
On August 6, Tesla and SpaceX officially confirmed that the factory site is located in Grimes County, Texas. The first-stage investment amount is US$16.8 billion and is expected to employ at least 3,000 employees. A document submitted by SpaceX in May pointed out that if all construction phases are included, the potential investment amount of the overall plan could reach up to US$119 billion.
This is an extremely large plan for a company that currently does not have any fabs officially in production. And this is why TSMC’s name appears in relevant news and is particularly attracting attention.
TSMC's core competitive advantage comes from operating its fabs according to its own plans and providing production capacity to paying customers. These customers typically have to wait in line for capacity rather than directly deciding on fab construction schedules. However, operating a facility built entirely around a single customer's schedule and chip type is almost completely contrary to TSMC's original operating model.
Frankly speaking, TSMC has reason to consider this kind of cooperation only if Terafab's actual demand is large enough and its credibility is high enough. In this way, Terafab can provide stable demand support for the new factory near Dallas and reduce investment risks; otherwise, the new factory will lack major customers that have been confirmed to be stationed there.
If the Texas plant is built around Terafab, TSMC will be betting on a more concentrated investment. This investment will be closely linked to Musk's ability to execute the plan as scheduled, Tesla's financial situation, and whether xAI's computing workloads really require the huge production capacity Musk claims.
At present, the relevant companies have not confirmed any transaction terms or amounts, nor have they confirmed whether the negotiations between the two parties have progressed beyond the preliminary evaluation stage.
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