TSMC in Early Talks With Musk Over Texas Terafab Role
TSMC is in early-stage talks with Elon Musk regarding a potential role in the planned Terafab foundry in Texas.
The semiconductor giant Taiwan Semiconductor Manufacturing Co. (TSMC) is reportedly engaged in preliminary discussions with Elon Musk regarding a potential involvement in the billionaire's ambitious Terafab foundry project in Texas. While the talks are currently in their infancy, the collaboration could reshape the landscape of chip manufacturing in the United States.
Potential Partnership Models Under Consideration
According to reports, several structural frameworks are being explored to define how the two tech titans might work together. Because the discussions are in the early stages, no final decision has been reached, but the following options are reportedly on the table:
- TSMC-Led Operation: One scenario involves TSMC owning and operating the Texas facility, with SpaceX acting as a primary investor and the guaranteed purchaser of the chips produced at the plant.
- SpaceX-Led Ownership: An alternative model could see SpaceX holding a majority stake in the Terafab plant, fundamentally shifting the control of the foundry.
Elon Musk has personally acknowledged these developments, confirming on the social media platform X that discussions with TSMC are indeed taking place, though he emphasized that they remain at an early stage.
The Timeline Challenge: Building and Scaling
TSMC Chairman and CEO CC Wei has highlighted that the logistical realities of semiconductor manufacturing will be a decisive factor in these negotiations. Building a state-of-the-art wafer fabrication plant is not an overnight process.
Wei noted that the timeline for such a massive undertaking involves two critical phases:
- Construction: Building a new wafer fabrication plant typically requires two to three years.
- Scaling: Once the facility is built, expanding production capacity to meet demand can take an additional one to two years.
Wei described these timelines as a "fundamental" aspect of the foundry industry that must be factored into any potential partnership.
TSMC’s Massive Expansion in the United States
The proposed Texas project aligns with TSMC's aggressive strategy to bolster its manufacturing footprint across the United States. The company has already committed staggering amounts of capital to American soil.
Since December 2020, Taiwan’s Ministry of Economic Affairs has approved applications for TSMC to invest USD 44 billion in the U.S. Furthermore, TSMC has significantly ramped up its presence in Arizona. Following an announcement in March 2025, the company planned an additional USD 100 billion investment in Arizona, building upon an earlier USD 65 billion plan. This brings the total planned investment in Arizona to a massive USD 165 billion.
The Arizona expansion is set to include:
- An increase in advanced wafer fabrication facilities from three to six.
- Two advanced integrated circuit assembly units.
- A dedicated research facility.
As the discussions regarding the Texas Terafab continue, the industry remains watchful to see whether TSMC will act as the operator or a partner in Musk's vision for the future of chip production.