Musk says Tesla and SpaceX will build and run Terafab; TSMC gets at most a sublease and Intel fell 3.2%
Musk says Tesla, SpaceX and xAI will build and run the Texas megafab and TSMC gets at most a sublease, "nothing more than that," while Intel's chief says the chipmaker stays on as development partner. The question left open is what either foundry's role is actually worth.
Vincent Jiang · 3 min read
Musk reclaims the fab in two sentences
Elon Musk just settled the week's biggest semiconductor trade in two sentences. "No, we will build and run the fab. Let there be ZERO doubt about that," he posted on X on October 7: "Maybe TSMC subleases part of the Terafab if they want, but nothing more than that." 1 The market had spent the week pricing the opposite, after a report by Taiwan-based journalist Tim Culpan sketched TSMC's likeliest setup as owning and operating a new fab, with SpaceX taking equity and guaranteeing wafer purchases 2, and Musk fanned it on October 3 with "just discussions, but something may come of it" 3. Intel fell about 3% on Monday and again on Tuesday, and traded a further 3.2% lower on Wednesday; TSMC's Taipei shares closed up 3% on Monday 345.
Intel keeps a seat, not a contract
The other half of the reversal came from Intel. Chief executive Lip-Bu Tan, in Tokyo ahead of an event marking the chipmaker's 50th year in Japan, said Intel will keep working on Terafab, which it joined as development partner in April 46. Its 14A process is the venture's only named technology 7. The paperwork is thinner than the headlines: SpaceX's IPO filing calls Terafab a general framework under which neither Tesla nor Intel is obliged to stay, and Intel has disclosed no financial terms 7. On paper it is two factories, one for Tesla vehicles and robots, one for AI data centers in space, targeting a terawatt of computing capacity a year, with $16.8 billion committed to the first phase and up to $119 billion sketched across phases 48.
The multiple already assumes the customer
That seat is already priced. Intel has more than tripled this year and trades near 57 times 2027 earnings estimates, against about 22 times for TSMC 37. The foundry underneath that multiple booked $5.8 billion of second-quarter revenue, lost $2.1 billion, and collected just $293 million from outside customers, $181 million of it from Altera 57. The build-out behind the story is shrinking too: quarterly capital spending has more than halved since 2023 10. "Intel's investors are wearing rose-colored glasses right now," D.A. Davidson's Gil Luria said 3.
Intel's quarterly capex has more than halved since 2023
Data
| Capital spending | |
|---|---|
| Q3 '23 | $5.75B |
| Q4 '23 | $6.7B |
| Q1 '24 | $5.97B |
| Q2 '24 | $5.68B |
| Q3 '24 | $6.46B |
| Q4 '24 | $5.83B |
| Q1 '25 | $5.18B |
| Q2 '25 | $3.55B |
| Q3 '25 | $2.43B |
| Q4 '25 | $3.49B |
| Q1 '26 | $3.64B |
| Q2 '26 | $2.56B |
Intel Foundry's outside customers paid for a sliver of its $5.8 billion quarter
Data
| Q2 2026 | |
|---|---|
| Segment revenue | $5.8B |
| Operating loss | -$2.1B |
| External customer revenue | $0.29B |
| From Altera | $0.18B |
TSMC would rather sell to Musk than run for him
TSMC, for its part, was never handing over the keys. Bank of America's Haas Liu put the likelihood of TSMC licensing technology or operating the fab for a meaningful Terafab stake at "low" 3, and reporting out of Taiwan says the foundry would rather count Musk as an anchor customer for its own Texas expansion, reports put at up to six fabs, than cede manufacturing control 9. TSMC reports on October 15, with 2026 capital spending guided to $60 billion to $64 billion 9. Intel's 14A design kit lands this month, and Tan expects firm customer decisions on 14A from the second half of this year into 2027 57. The post Musk was replying to already carried the frame: "the battery playbook again. Build at a scale nobody else will, and suppliers can't afford to sit out" 1. Both chipmakers spent the week fighting to run Terafab; Musk's answer is that neither of them will.
Deepdive
AI-generated from this story and its cited sources. Not investment advice.
