Elon Musk Confirms TSMC Talks for Terafab Project as Intel Stock Drops

Intel Corp. stock dropped following reports that Elon Musk’s semiconductor initiative, Terafab, is discussing a potential manufacturing partnership with Taiwan Semiconductor Manufacturing Co. The discussions threaten to displace Intel from a core supply role in the ambitious chipmaking project.

Elon Musk Confirms Semiconductor Talks With TSMC

Elon Musk confirmed via social media on October 3, 2026, that conversations are underway regarding a potential collaboration between TSMC and Terafab, a joint semiconductor project between Tesla, SpaceX, and xAI. Just discussions, but something may come of it, Musk wrote in response to a report by Tim Culpan’s Culpium newsletter.

Under the initial framework reported by Culpium and detailed by Tom’s Hardware, TSMC could build and operate a dedicated facility in Texas to exclusively supply Musk’s companies. Plan A mirrors TSMC’s international joint ventures in Germany and Japan, where local partners provide capital and chip demand while TSMC contributes advanced process technology and operational oversight. Plan B would grant SpaceX majority ownership of Terafab while TSMC provides operational expertise, a configuration that represents a departure from the foundry’s standard operating model.

Intel Stock Drops As Terafab Supply Chain Shifts

Intel stock fell in early trading as markets absorbed the prospect of TSMC capturing the Terafab partnership. Terafab was previously linked to Intel as its primary manufacturing collaborator, with plans to utilize Intel’s 1.4nm-class 14A process technology to produce custom silicon for Tesla, SpaceX, and xAI. Tom’s Hardware noted that if TSMC joins the initiative and brings its own proprietary node, Intel’s 14A technology could be dropped entirely from the project.

Beyond process node competition, industry analysts pointed to potential patent hurdles. While Intel maintains a broad cross-patent license agreement with TSMC, Terafab does not possess a similar cross-license. Producing chips via an Intel-developed node could create patent infringement issues for the Musk-led venture, providing an additional incentive for Terafab to bring TSMC directly into the corporate structure.

Tesla Shares Rise On Production Growth And FSD Outlook

Financial analysts maintained positive valuations despite the broader supply chain maneuvers. Morningstar reaffirmed its $450 fair value estimate for Tesla stock, projecting 10 percent delivery growth for the year and pointing to Full Self-Driving technology as a key driver for consumer demand. Gene Munster forecasted 15 percent delivery growth for next year, asserting that Tesla’s vehicle value and autonomous driving advantages will exert commercial pressure on traditional automakers.