Elon Musk Sets the Record Straight on Terafab. What It Means for Intel, TSMC, and SpaceX Stocks.

Elon Musk’s ambitious Terafab semiconductor project has put Intel (INTC), Taiwan Semiconductor Manufacturing (TSM), and SpaceX (SPCX) in the spotlight. A report about a potential partnership between TSMC and Terafab raised questions about Intel’s role in the project. However, Musk’s subsequent comments cast the initial speculation in a different light.

At the heart of the uncertainty is how the three companies could fit into Musk’s plans to build an advanced semiconductor manufacturing operation in Texas. While Intel has already emerged as a key technology partner, the prospect of TSMC’s involvement raised concerns that the U.S. chipmaker could be sidelined. Musk later sought to address those concerns, challenging some of the assumptions surrounding the reported discussions.

So, what is really happening with Terafab, and what do Musk’s comments mean for Intel, TSMC, and SpaceX stocks? More importantly, what is the biggest takeaway for investors? Let’s take a closer look.

Intel, TSMC, and Terafab: Musk Sets the Record Straight

Culpium, a Substack covering the Asian technology world, reported on Oct. 2, citing sources, that TSMC was exploring ways to help Terafab operate its semiconductor factories in Texas. “Just discussions, but something may come of it,” Elon Musk, CEO of SpaceX and Tesla (TSLA), wrote in a post on X in response to the report.

Intel shares slid 5.7% over last Monday and Tuesday as investors interpreted the news as a sign of increased competition for the chipmaker. Still, Musk acknowledged in response to a separate post on X that any chips supplied by TSMC would likely supplement those provided by Intel. Intel became Terafab’s first named semiconductor manufacturing partner in April, and Musk subsequently said the project planned to use Intel’s next-generation 14A manufacturing process.

Concerns about Intel’s role eased last Wednesday after Musk and Intel CEO Lip-Bu Tan sought to clarify the chipmaker’s involvement in Terafab. Tan told Bloomberg that Intel would remain involved in the project. Meanwhile, Tesla commentator Herbert Ong wrote on X last Tuesday that “The likeliest deal has TSMC owning and running the fab,” before later clarifying that he meant “a PIECE of the fab.” Musk swiftly rejected that suggestion, responding to Ong’s post: “No, we will build and run the fab. Let there be ZERO doubt about that.” He also clarified that the discussions concerned only the possibility of TSMC leasing part of the planned site, without taking on an operational role.

Musk’s Terafab Clarification Eases Intel Concerns but Leaves Room for TSMC Orders

Musk’s clarification significantly changed the interpretation of the Terafab story. Rather than TSMC stepping in to operate part of the facility, its potential involvement would be limited to leasing a portion of the planned site.

Technically, such an arrangement could result in two separate semiconductor operations on the same broader campus. Terafab would remain under Musk’s control, with Intel providing critical manufacturing technology. At the same time, TSMC could establish its own operations on the leased portion of the site.

Importantly, the sublease alone would not mean Terafab would use TSMC’s process technology, TSMC would manufacture chips for the project, or TSMC would manage Terafab’s production lines. TSMC is reportedly considering a multibillion-dollar manufacturing expansion in Texas, so the site could simply provide another location option. Still, Musk’s earlier suggestion that TSMC’s chips could supplement Intel’s appears to leave open the possibility that TSMC could secure chip orders from Terafab.

What Musk’s Terafab Clarification Means for Intel, TSMC, and SpaceX Stocks

At this point, let’s take a closer look at what Musk’s clarification means for INTC, TSM, and SPCX stocks.

For Intel, Musk’s clarification is the most reassuring development and, consequently, a positive for its stock. INTC shares closed slightly higher last Wednesday following the clarification, bucking a broader chip-sector selloff driven by rising bond yields. Musk’s comments eased concerns that TSMC could diminish Intel’s role in Terafab, preserving the chipmaker’s opportunity to demonstrate the commercial viability of its 14A process technology, a key to its foundry turnaround.

For TSMC, the new interpretation is much less exciting than the original story. Under Musk’s clarification, TSMC’s potential role would be closer to that of a tenant or neighboring manufacturer. Such an arrangement could still offer strategic benefits if TSMC is looking to expand its capacity in Texas, but the bigger question is whether it would secure any chip orders from Terafab. After all, dual-sourcing is common practice in the semiconductor industry. For now, however, the implications for TSM stock remain largely neutral.

For SpaceX, the implications are more mixed. On the positive side, retaining operational control would allow SpaceX and Tesla to coordinate chip designs, production schedules, and manufacturing capacity around their own needs. That fits SpaceX’s broader goal of securing chip supplies to support both companies’ AI initiatives. The downside, however, is execution risk, given the immense complexity of operating a leading-edge semiconductor fab. TSMC has spent decades refining its manufacturing expertise, improving production yields, and mastering complex fabrication processes. Even with Intel providing its 14A technology, SpaceX would still need to overcome challenges involving equipment installation, engineering expertise, production yields, reliability, staffing, and supply chain management to manufacture advanced chips efficiently at a commercial scale.

The Biggest Takeaway

The biggest takeaway is that this is no longer primarily an Intel-versus-TSMC story. Musk’s clarification suggests TSMC would not be challenging Intel’s role as Terafab’s manufacturing technology partner. The more important question is whether SpaceX and Tesla can successfully operate Terafab themselves, with Intel providing the manufacturing technology and TSMC potentially operating nearby rather than taking over the project.

On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.