TSMC is in preliminary talks to partner with Elon Musk's Terafab project, an initiative focused on semiconductor manufacturing. Potential cooperation models include TSMC managing a facility with Musk's companies providing financing and orders, or a joint venture where Musk's firms retain control while TSMC contributes expertise and capital.
Terafab, backed by Tesla and SpaceX, aims to produce chips for AI infrastructure with a total annual equipment capacity of 1 TW. The hardware is intended for autonomous vehicles, humanoid robots, and SpaceX orbital data centers. The project is located in Grimes County, Texas.
Initial investments for the complex are estimated at $16.8 billion, with total funding potentially reaching $119 billion. The project aims to create at least 3,000 jobs and integrate chip design, manufacturing, memory production, and advanced packaging under one roof. Intel has already joined the initiative.
Musk launched Terafab to mitigate risks of chip shortages and supply chain disruptions. While Tesla and SpaceX will continue to use existing suppliers, Terafab is designed to meet their internal needs. Analysts at Bernstein note that achieving a 1 TW capacity could require investments between $5 trillion and $13 trillion.
Separately, TSMC is considering building a new production complex in Texas, potentially consisting of multiple plants costing at least $20 billion each. This expansion depends on the extension of US tax incentives. Currently, TSMC has committed $265 billion to its Arizona operations.
