Intel shares dropped more than 4% in premarket trading after Elon Musk confirmed Taiwan Semiconductor Manufacturing Co. is in early talks to join his Terafab chip venture in Texas. TSMC shares rose on the news, though Musk says no agreement has been reached and Intel remains Terafab's first manufacturing partner.
Intel shares fell more than 4% in premarket trading on Monday. Taiwan Semiconductor Manufacturing Co. shares rose about 3% in Taiwan and gained 1% in premarket U.S. trading. The moves followed Elon Musk's confirmation that TSMC is in talks to join his Terafab chipmaking venture, the project Intel signed onto as its first manufacturing partner in April.
Musk confirmed on October 3, 2026 that TSMC is in discussions with Terafab about chip manufacturing in Texas. He characterized the talks as early-stage, and no agreement has been reached.
Two structures reportedly on the table
The discussions cover two possible structures, according to the report. In one, TSMC would operate the Texas facility itself, with Terafab serving as the anchor customer. In the other, TSMC would contribute its manufacturing expertise while other investors hold majority ownership of the facility. Neither option has been agreed to, and both remain on the table as part of the preliminary talks.
What Terafab is building
Terafab is a joint venture between Tesla, SpaceX and xAI aimed at a vertically integrated semiconductor fabrication complex built around anticipated AI computing demand, targeting approximately 1 terawatt of output per year. The main site sits in Grimes County, Texas, where the first phase carries an investment of approximately $16.8 billion. The project plans to create at least 3,000 jobs as it develops. A prototype facility is already under way at Tesla's Giga Texas site in Austin.
Where Intel stands
Intel became Terafab's first designated manufacturing partner in April 2026, contributing its advanced 14A process technology. Musk's comments do not say Intel is being replaced, and the TSMC talks have not produced a deal. The next concrete markers are a signed agreement with TSMC, a decision on which operating model is chosen, and any update on Intel's 14A commitment.
For now, the confirmation shows only who is talking — not who is building anything yet.
Sources: MarketWatch (snippet-based), Crypto Briefing
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