Musk rules out TSMC role in Terafab operations; Intel gains

Elon Musk has firmly ruled out TSMC taking operational control of the Terafab AI chip complex, stating that his company will build and run the facility. This decision limits TSMC's potential involvement to a possible sublease of part of the site. Consequently, TSMC's ADR shares experienced a 1.3% decline in early trading, while Intel, which had fallen 3.2% the previous day due to concerns about possible sidelining, surged 1.6% ahead of the market opening.

Intel CEO Lip-Bu Tan affirmed to Bloomberg News that the company would continue to be involved in the project. Terafab, a joint venture between Tesla and SpaceX in Grimes County, Texas, aims to generate over one terawatt of annual AI computing capacity for various Tesla products, SpaceX data centers, and xAI. The initial investment stands at $16.8 billion, with potential spending up to $119 billion across all phases and a projected workforce of at least 3,000.

Intel entered the project as the sole manufacturing partner in April, with its cutting-edge 14A process node designated as the facility's exclusive technology. The TSMC speculation emerged on Friday when Culpium newsletter reported that the Taiwanese company was contemplating the Terafab as an anchor client for a future semiconductor factory in Texas. Musk confirmed those discussions on Saturday, clarifying that they were merely preliminary conversations, but potential developments may arise.

For Intel, the resolution matters significantly more than it might initially appear. The company's external foundry revenue amounted to only $293 million in Q2, making Terafab one of its most prominent outside successes. Intel's April commitment to secure the 14A node was a strategic cornerstone for the company's foundry aspirations.