Full Breakdown
Taiwan Semiconductor Manufacturing Co. (TSMC) Evaluates Texas Expansion Amid Talks with Elon Musk’s Terafab Project
By Drooid · · How we work
Core Development: Texas Expansion and Terafab Negotiations
On the third-quarter 2026 earnings call, C.C. Wei, chairman and CEO of TSMC, confirmed the company is assessing a potential new fab in Texas and is in discussions with Elon Musk’s “Terafab” project about possible use of the facility. TSMC stressed any involvement would require the fab to be operated by TSMC, conflicting with Musk’s stance that his companies will run the complex themselves.
Background & Context
TSMC supplies more than 90 % of the world’s most advanced chips and has been expanding its U.S. footprint to meet AI-focused demand from customers such as Nvidia and Apple. The firm previously pledged $265 billion for U.S. plants, including a $100 billion commitment in Arizona announced in July. Strong AI-related orders drove a record third-quarter profit of 763.1 billion NTD (? $24 billion) and revenue of 1.49 trillion NTD (? $46 billion), up 51 % year-on-year.
Data & Statistics
- 2026 capital-expenditure budget: $60-$64 billion (up from $52-$56 billion earlier in the year).
- U.S. fab count: Arizona hosts one operational fab and a second 2-nm fab slated for mass production in Q3 2027; Texas is under evaluation as an additional site.
- Global fab network: About 20 fabs worldwide, including 13 in Taiwan and five to six overseas facilities under construction.
Official Statements & Responses
Wei emphasized the Texas evaluation is driven by requests from major U.S. customers and U.S. government support. He reiterated that any partnership with Terafab would require TSMC to run the fab, effectively ruling out a sub-leasing model.
Market Reaction
The news triggered short-term equity moves in the broader foundry sector. On October 15, 2026, Intel shares fell 3.33 % in pre-market trading after reports highlighted the TSMC-Terafab talks. A similar dip of 2.26 % occurred on October 14, 2026, reflecting investor concerns about Intel’s role as a potential Terafab partner.
Conflicting Reports & Gaps
Sources differ on the timeline for Terafab’s rollout. One report projects the first EUV lithography tool arriving in mid-2027, with the experimental shell completed by late 2027 and volume production beginning in late 2029. Another analysis suggests equipment installation could start in mid-2028, with high-volume manufacturing not expected until mid-2030. No definitive schedule has been confirmed.
Verbatim Quotes
- “The AI market continues to be very strong,” — C.C. Wei
- “We expanded our capacity consideration to see outside Arizona, whether we can get another chance to expand our capacity,” — C.C. Wei
- “Maybe TSMC subleases part of the Terafab if they want, but nothing more than that,” — Elon Musk
What’s Next
TSMC will announce conclusions once discussions with Terafab progress. Upcoming 2027 capital-allocation decisions will likely reflect the outcome, while AI chip demand continues to pressure U.S. capacity expansion.