TSMC demands operational control for any Musk Terafab partnership

Chipmaker says it must run the plant, clashing with Musk’s plan for Tesla and SpaceX to operate the facility themselves.

Threat Times Systems DeskOctober 15, 20262 min read

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Illustration: A gleaming silicon wafer rests on a sterile white tray inside a bright cleanroom, surrounded by complex robotic arms and precision machinery, symbolizing the strict t — AI-generated illustration: Threat Times

Key points

TSMC chief C.C. Wei stated the company must operate any shared fabrication plant.
Elon Musk previously insisted Tesla and SpaceX would build and run the Terafab.
The two parties have not yet reached a formal agreement on the arrangement.

TSMC chairman C.C. Wei stated on Thursday that the chipmaker requires full operational control over any fabrication plant involved in Elon Musk’s Terafab project. According to Bloomberg, Wei made these comments during the company’s third-quarter earnings call, emphasizing that no deal exists yet.

The Taiwanese semiconductor giant is willing to collaborate with Musk’s venture, but only under strict conditions. Wei clarified that TSMC must manage the facility’s operations. This stance directly contradicts earlier statements from Musk, who indicated that Tesla and SpaceX would handle the plant’s management themselves.

The Operational Dispute

Tensions over control emerged clearly in late October. On 7 October, Musk posted on X that his companies would construct and operate the plant independently. He suggested that TSMC might sublease a portion of the facility if desired, but nothing more. Bloomberg reported this position shortly after the post.

Wei addressed the conflict during the earnings call when JPMorgan analyst Gokul Hariharan asked about potential new Texas facilities. Wei confirmed that TSMC is in discussions with the customer behind Terafab. However, he reiterated that the fabrication plant must be run by TSMC, similar to its joint ventures in Japan and Germany.

Project Context and Financials

Terafab is a joint effort between Tesla, SpaceX, and xAI. The first phase involves a $16.8 billion facility in Grimes County, Texas, which broke ground in August. The plant aims to supply chips for Musk’s vehicles, robots, and data centers. Intel remains part of the project, with CEO Lip-Bu Tan confirming last week that it will supply its 14A manufacturing process.

TSMC’s involvement is part of a broader expansion strategy. Wei noted that large US customers are requesting more capacity, prompting TSMC to scout sites in Texas beyond its existing Arizona base. The company reported third-quarter revenue of $46.7 billion, a 41% year-over-year increase, with fourth-quarter forecasts ranging from $52.3 billion to $54.3 billion.

What should you do?

Security and technology professionals should monitor supply chain contracts for clauses regarding operational control and intellectual property ownership. Organizations relying on semiconductor suppliers should assess risks associated with joint ventures involving multiple large entities. Review vendor agreements to ensure clear definitions of data handling and facility management responsibilities. Track official statements from both TSMC and Tesla for updates on the project’s status.

What to do and how to stay safe: TSMC

Review supply chain contracts for clauses regarding operational control and intellectual property ownership.
Assess risks associated with joint ventures involving multiple large entities in your supply chain.
Monitor official statements from TSMC and Tesla for updates on the Terafab project status.
Ensure vendor agreements clearly define data handling and facility management responsibilities.

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General security guidance from the Threat Times newsroom. It is not confirmed advice from the organisations named in this story.