TSMC will talk to SpaceX about its Terafab chip plant, but on one condition: the foundry runs the fab. CEO C.C. Wei said as much on the company’s October 15 third-quarter earnings call. Elon Musk, it turns out, has been telling people something rather different.
Wei said TSMC is “talking to one of our customers who is trying to build a fab, Terafab, let me be more specific,” and is checking whether it could use that capacity. An analyst asked whether TSMC would own the facility. Wei declined to commit: “We are still in discussion, let me say that. Either way it would be possible.” On operations he was blunt. A Texas plant “must be run by TSMC.”
Musk confirmed on X earlier this month that the two companies had talked. He also wrote “we will build and run the fab,” with TSMC at most subleasing part of the site. As ever, the detail that matters is who holds the keys.
Why Texas, and what it costs
Wei’s explanation for the American push was simple. “Most of our large customers are in the U.S., and they request TSMC to increase the capacity,” he said, adding that TSMC has sent teams to Texas for evaluation.
The numbers give him room to argue. Third-quarter revenue reached $46.72 billion at a 66.4% gross margin. High-performance computing revenue rose 22% quarter over quarter to 68% of the total. Fourth-quarter guidance is $52.3 billion to $54.3 billion, and full-year revenue should grow about 44%.
Operating control also fits what American plants cost. Management said overseas fabs will trim gross margin by about 2% in 2026, and that drag could widen to 3% to 4% over the next few years. Capex guidance holds at $60 billion to $64 billion. None of this has made Wei shy about demand: “We have no intention to leave food on the table for others.”
SpaceX and its chip hunger
SpaceX has plenty of reasons to want its own supply. In the second quarter its AI segment revenue rose 247% to $2.56 billion, and $15.83 billion of its $18.37 billion in capex went into AI computing. Musk said on that call, “Our understanding within NVIDIA is that we will receive a very small percentage of their GPUs next year.”
That puts SpaceX in a queue behind much larger buyers. TSMC makes the chips that Nvidia designs, and no rival matches its scale for advanced AI parts. The pricing power shows in the margins: gross margin climbed from 59.5% to 66.4% year on year, operating margin from 50.6% to 58.7%, and net margin from 45.7% to 51.1%.
The market’s reaction
Earnings per share came in at $4.60 against a $4.46 consensus, yet TSM shares fell 3.05% to $416.90 in morning trading and are down 11.71% over the past week. SPCX slipped 3.61%. Wei described TSMC’s planning for 2027 as “prudent.” On Terafab he promised news only when there is something firm: “If we have any solid conclusion, we will share with you.”
Sources
- Taiwan Semiconductor Wants In on SpaceX's Terafab — but Only If It Runs the Fab
- TSMC or Nvidia: If I Could Only Own 1 for the Next 5 Years, It Would Be This 1. | The Motley Fool
- Transistors Beyond 1nm Node: 4 Global Tech Giants Competing for Next-Gen Semiconductor Hegemony
Photo: Alexandre Debiève / Unsplash (Unsplash License)
