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- Musk said Tesla and SpaceX will build and operate Terafab, with TSMC at most subleasing part of the site.
- Intel shares rose about 2% in pre-market trading on October 7 after falling 3.2% a day earlier.
- First-phase investment is $16.8 billion, with total spending of up to $119 billion across all phases.
Terafab will be built and run by Tesla and SpaceX, Elon Musk said, leaving TSMC at most a sublease as Intel shares rose on its continued role in the project.
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Elon Musk said on October 7, 2026, that Tesla (TSLA) and SpaceX will build and run the Terafab AI chip complex in Texas themselves, ending days of speculation about who would control the project. "We will build and run the fab. Let there be ZERO doubt about that," Musk said, adding that TSMC could sublease part of the complex "if they want, but nothing more than that." Intel (INTC) shares rose about 2% in pre-market trading, while TSMC's U.S.-listed shares (TSM) fell about 1.3%.
What Did Musk Say About Terafab and TSMC?
Musk said Terafab remains a Tesla and SpaceX operation, with TSMC limited to a possible tenant role rather than a manufacturing or management partner. The statement followed confirmation that TSMC was in talks over a role in the project, which had unsettled investors in Intel, the project's only named manufacturing partner since April.
Intel Chief Executive Lip-Bu Tan said in Tokyo that the company will remain Terafab's manufacturing partner. The facility's only identified process technology is Intel's 14A node, which uses High-NA EUV lithography, a newer generation of chipmaking equipment that prints finer circuit patterns.
Why Did Intel Shares Rise?
Intel shares rose because Musk's comments and Tan's confirmation removed the near-term risk that TSMC would displace Intel at Terafab. The stock fell 2.6% on Monday and 3.2% on Tuesday as traders weighed what a TSMC role could mean.
The project matters to Intel's foundry business, which makes chips for outside customers. External foundry revenue totaled $293 million in the second quarter, so a large anchor customer would be significant. The episode shows how sensitive ai stocks and chip names have become to announcements about where advanced AI silicon will be made.
What Is Terafab?
Terafab is a joint Tesla and SpaceX semiconductor project in Grimes County, Texas, about 90 miles northwest of Houston, on the 6,166-acre former Gibbons Creek coal plant site. The plant is intended to supply chips for Tesla's Optimus humanoid robots and Cybercab vehicles, SpaceX's planned space-based data centers and xAI.
Key project figures:
- Initial investment: $16.8 billion, confirmed in August 2026 by Texas Governor Greg Abbott.
- Full buildout: up to $119 billion across all phases.
- Capacity target: one terawatt of AI compute per year.
- Workforce: at least 3,000 employees.
- Long-term output goal: 1 million wafer starts per month, or 100 to 200 billion custom AI and memory chips a year.
What Comes Next for the Project?
The next milestones are technical and construction-related. The 14A process design kit, version 0.9, is expected this month. Texas filings list a construction start of December 1, 2026, with first-chip production targeted for late 2027 and high-volume manufacturing in 2028.
Control is the main open question. A TSMC sublease would add outside capacity and process expertise without changing governance. Musk's stated structure keeps manufacturing decisions with Tesla and SpaceX, while Intel supplies the process technology.
Outlook
Musk has set Terafab's ownership structure as Tesla and SpaceX operating the plant, Intel providing 14A manufacturing and TSMC holding at most a tenant position. Intel's rebound reflects relief rather than new contracts, and the sector will watch the October design-kit release and the December construction start for evidence that the 2027 and 2028 targets hold.
Mentioned tickers: TSLA, INTC, TSM