Elon Musk confirmed over the weekend that Taiwan Semiconductor Manufacturing Co. is in discussions to participate in Terafab, the ambitious semiconductor manufacturing project designed to supply Tesla, SpaceX and xAI with advanced AI and computing chips. Musk's comment came in response to a report by Culpium: “Just discussions, but something may come of it.”
The confirmation produced different reactions across related equities. Tesla shares edged up about 1% in overnight trading after closing Friday at $370.59, supported by stronger-than-expected third-quarter deliveries of 486,532 vehicles versus a consensus near 461,000. In contrast, Intel shares fell about 2% Monday, while TSMC's US-listed shares gained 1.4%. Intel has surged roughly 200% this year, partly on expectations tied to Terafab, while TSMC has gained about 50%.
Musk announced Terafab in March, with Tesla and SpaceX jointly leading the effort. The planned facility aims to manufacture 1 terawatt of computing capacity annually, roughly double the amount needed by the entire United States. The project is intended to produce memory chips, logic chips and advanced packaging for applications including humanoid robots, satellites and data centers. Musk has previously said Tesla and SpaceX could eventually require as many as 200 billion AI chips per year and that existing suppliers cannot keep pace.
Intel is the only other semiconductor manufacturer publicly named in connection with Terafab. Musk previously said the project would use Intel's 14A manufacturing process. Analysts at Oppenheimer described one possible scenario in which TSMC would own and operate a fab serving only Tesla, SpaceX and xAI, while SpaceX invests or commits to chip purchase volumes. Musk later indicated that any chips produced by TSMC would likely supplement rather than replace chips supplied by Intel.
Still, some analysts warned that the prospect of another major chipmaker joining Terafab could complicate expectations around Intel's role. D.A. Davidson's Gil Luria said enthusiasm around Terafab has been a major catalyst behind Intel's dramatic stock ascent, adding: “If it turns out Intel does not participate, or is only one fab technology provider, investors may reconsider the credit they gave Intel.”
Intel also faces competitive pressures beyond Terafab. Susquehanna analysts said Intel likely continued losing CPU model share in laptops and desktops during the third quarter, while AMD gained ground and Qualcomm reached its highest laptop share yet. Intel's laptop model share was estimated at 68.1%, down 3.9 percentage points quarter over quarter. No signed manufacturing contract, capital spending figure, purchase guarantee or production timetable has been disclosed for TSMC's potential Terafab involvement.
