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Elon Musk confirmed discussions with TSMC regarding a potential collaboration for his Terafab semiconductor initiative, according to Tim Culpan’s Culpium newsletter on Friday. Under the arrangement considered most probable by Culpan, TSMC would own and operate a new facility exclusively serving Tesla, SpaceX, and xAI, while SpaceX/Terafab could invest or commit to guaranteed chip purchases. The exact ownership structure remains under discussion, with another option involving SpaceX holding majority control while TSMC provides operational expertise and process technology.

Two specific plans have been outlined as possibilities rather than confirmed options. Plan A resembles existing joint ventures where local partners provide capital and demand while TSMC contributes technology. Plan B would see SpaceX hold majority ownership while TSMC operates the facility, a structure that would be new for the world’s leading contract chipmaker. Both plans remain speculative since nothing is official at this point, and other arrangements could still emerge.

The development raises questions about Intel’s role in Terafab, which currently supplies its 1.4nm-class 14A process technology. If TSMC becomes involved, Intel’s 14A could drop out because TSMC will bring its own node. Additionally, while Intel has a broad cross-patent license with TSMC, Terafab does not, meaning producing chips using an Intel-developed node might infringe on TSMC’s patents. Consequently, Musk may need to keep TSMC close, perhaps by buying into Terafab, to ensure uninterrupted supply of custom silicon for his companies’ AI, automotive, and space vehicles.