Elon Musk has drawn a line around Terafab, the giant AI chip plant Tesla and SpaceX plan to build in Texas. On 7 October 2026 he wrote on X: “No, we will build and run the fab. Let there be ZERO doubt about that. Maybe TSMC subleases part of the Terafab if they want, but nothing more than that” [1][2].
That statement is confirmed: it is Musk’s own post. On the same day, Intel’s chief executive Lip-Bu Tan told Bloomberg that Intel, already a partner, would stay involved, as reported by Reuters and others [1][3][4]. What neither statement does is explain how a fab run by Musk’s companies, built around Intel technology, would host a TSMC “sublease”.
What exactly did Musk say?
Musk was replying on X to a thread about TSMC’s possible role in Terafab [2]. Reuters describes the post he answered as saying the most likely outcome was TSMC owning and running the fab [1]. His reply rejected that outright and offered TSMC only the option of subleasing part of the site [1][2].
The reply came days after Musk had said there had been discussions about possible cooperation with TSMC on Terafab, without giving details, according to Reuters [1]. Quartz reports that Musk’s confirmation of early-stage TSMC talks had weighed on Intel’s shares, because Intel was the first company to back the venture when it pledged support in April [4].
So the sequence is: Musk confirms talks with TSMC; speculation grows that TSMC might run the plant; Musk says it will not.
What is Terafab?
Reuters describes Terafab as a planned Tesla–SpaceX project in Texas that aims to build “a gigantic chip fab” to make artificial intelligence chips [1].
Quartz adds detail from earlier announcements and filings [4]:
- The site is in Grimes County, Texas.
- Tesla and SpaceX launched the project with an initial investment of $16.8 billion and a planned workforce of at least 3,000 people.
- Chips made there are intended for Tesla’s Optimus robots and Cybercabs, and for space-based data centres SpaceX is developing.
- Total spending across all phases could reach as much as $119 billion, and SpaceX has proposed spending $55 billion to begin construction, according to a public notice on Grimes County’s website.
- When Intel joined in April, it said its chip design, fabrication and packaging expertise would help the venture reach a target of one terawatt of annual computing capacity for AI and robotics.
These are plans and proposals, not a finished plant.
Where does Intel stand?
Intel says it is staying in. Reuters reports that Lip-Bu Tan told Bloomberg on Wednesday that Intel, a partner in the project, will remain involved [1]. Quartz adds that he spoke to reporters before a Tokyo ceremony marking 50 years of Intel’s presence in Japan [4].
Tom’s Hardware notes that in April, Intel and Terafab announced the new chipmaker would use Intel’s next-generation 14A manufacturing process [3]. Quartz reports that Musk indicated on Tesla’s most recent earnings call that Intel’s 14A process would serve as the manufacturing backbone at Terafab [4]. Tom’s Hardware says details of the collaboration remain unknown; the general understanding is that Intel would license its manufacturing technology, but it is unclear whether Intel would also help ramp production [3].
Reuters says any TSMC involvement could challenge Intel’s role as Musk weighs partners [1]. TSMC and Intel did not immediately respond to Reuters’ requests for comment [1].
Why is a TSMC “sublease” an odd idea?
This is where the statements raise more questions than they answer. Tom’s Hardware sets out several problems with the idea, and its points are worth summarising as analysis rather than fact [3]:
- TSMC does not obviously need the space. It owns and runs dozens of advanced fabs and has its own expansion plans.
- Fabs are not generic warehouses. A plant set up around Intel’s 14A process would need different process flows, equipment, materials and contamination controls to run TSMC’s own processes. A TSMC line inside Terafab would look more like a separate TSMC fab on Musk’s site than a rented corner.
- Intellectual property. If Intel licenses 14A to Terafab, that agreement would likely restrict who can access Intel’s process information. Putting TSMC staff in the same facility could create contractual and IP-isolation headaches.
- Shared-site liability. If a shared power, water, chemical or cooling system fails and spoils wafers, deciding who is responsible becomes complicated.
- Capacity. If Terafab can serve Tesla, SpaceX and xAI and still have room to spare for TSMC, that raises the question of whether the early phases are overbuilt.
Tom’s Hardware’s central point is about definitions: if TSMC brings its own tools, staff and process technology, calling it a “sublease” undersells what would be a TSMC fab inside Terafab. If Terafab provides the tools and TSMC operates them, that looks close to the TSMC operating role Musk appears to be ruling out [3].
Why this matters
Leading-edge chipmaking is one of the hardest industrial jobs in the world, and only a few companies do it at scale. Musk’s statement is a claim that his companies will join that group by building and running their own plant, using Intel’s process, rather than handing the job to the industry leader.
That is a big ambition, and it is still at the planning stage. The plain reading of this week is that Musk wants control, Intel wants to keep its role, and TSMC’s place, if any, is undefined.
What we don’t know
- Whether TSMC wants any role at all. TSMC did not immediately comment to Reuters, and Quartz reports it has declined to comment on the matter [1][4].
- What Intel’s involvement actually covers. Licensing, production help or both remains unclear [3].
- What a TSMC “sublease” would involve in practice. Musk gave no detail [2].
- The timeline. None of the coverage we read gives a date for first chip production.
- Final spending. The $119 billion figure is a possible total across phases, and $55 billion is a proposal in a county notice, not committed capital [4].
The Bottom Line
Musk has said plainly, in his own words, that Tesla and SpaceX “will build and run” Terafab and that TSMC could at most sublease part of it [2]. Intel’s CEO says Intel remains involved, per Bloomberg’s interview as reported by Reuters [1].
The statement settles who wants control. It does not settle how a fab built on Intel’s 14A process could also host TSMC, or when Terafab will make its first chip. Until there are signed agreements and a construction timeline, treat Terafab as a large, credible-sounding plan with key partner roles still open. This is not investment advice.
Related on TSN: Intel joins Musk’s Terafab project, April 2026 (slug: intel-joins-elon-musk-terafab-the-0-billion-bet-to-build-the-worlds-largest-ai-chip-factory).
Sources
- Reuters, “Musk says TSMC won’t run Terafab AI chip complex,” via CNA, 7 October 2026. https://www.channelnewsasia.com/business/musk-says-tsmc-wont-run-terafab-ai-chip-complex-6438461
- Elon Musk, reply on X regarding Terafab and TSMC, 7 October 2026. https://x.com/elonmusk/status/2107721071571128709
- Anton Shilov, “Musk rejects rumors of TSMC takeover of Terafab — Intel reaffirms 14A node deal as Musk floats cleanroom ‘sublease’,” Tom’s Hardware, 7 October 2026 (news plus analysis). https://www.tomshardware.com/tech-industry/semiconductors/musk-rejects-rumors-of-tsmc-takeover-of-terafab-intel-reaffirms-14a-node-deal-as-musk-floats-cleanroom-sublease
- Cris Tolomia, “Intel is staying in Elon Musk’s Terafab chip venture despite TSMC talks,” Quartz, updated 7 October 2026. https://qz.com/intel-terafab-chip-venture-tsmc-musk-100726
