TSMC: In Talks with Terafab, but Insists on Retaining Factory Operational Control
nashnova research
TSMC CEO C. C. Wei confirmed the company is in discussions with Musk's Terafab project, but drew a hard line: TSMC must run the fab. That directly contradicts Musk's public stance that his companies will "build and operate" the facility — making control the deal's central sticking point.
What is TSMC's condition?
Wei told analysts on the earnings call: "The fab must be operated by TSMC." That is the prerequisite for any partnership.
This means → TSMC is willing to talk, but not as a capacity landlord — it will only participate as the operator.
Neither side has disclosed specific terms; negotiations remain at an early stage.
What has Musk said?
Musk stated last week that TSMC would at most lease capacity — not lead manufacturing operations.
He emphasized his companies will "build and operate" the Terafab facility.
In plain terms = one side says "we run the fab," the other says "you rent a production line at best" — their visions of the partnership are directly opposed.
What exactly is Terafab?
Terafab is Musk's flagship chipmaking venture, headquartered in Texas, designed to supply advanced semiconductors to Tesla and SpaceXAI.
Intel has already joined as a technology partner, helping develop the manufacturing processes Terafab will need.
The chips it plans to produce span Tesla's automotive and robotics businesses, plus the SpaceXAI group — which combines space technology with xAI's large-model operations.
Why does this standoff matter?
The fight over operational control is the central uncertainty in whether the Terafab partnership moves forward.
This reflects a deeper tension: Musk wants a self-controlled chip supply chain; TSMC insists that technology transfer must come with operational leadership.
With both sides publicly entrenched, the outcome will shape Terafab's manufacturing path — TSMC-led process technology, or Intel as the fallback.
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