Elon Musk confirms that SpaceX & Tesla will always remain a major customer of TSMC, but the Taiwanese chipmaker alone couldn't fulfill its demand, which is why they started the Terafab project with Intel.
Terafab Is Essential To Elon's Ambitious "In-House" Chipmaking Goals, But Says That SpaceX & Tesla Will Remain A Customer of TSMC
A few days ago, Lip-Bu Tan (CEO of Intel) and Elon Musk announced their partnership on the ground-breaking Terafab project, which will be responsible for producing custom and in-house chips for Tesla, SpaceX, xAI, and other ventures.The project is expected to begin its first trial run in 2029, producing 3000 wafers per month, which will scale up as the manufacturing process and yields improve.
At the same time, Tesla is a major customer of TSMC and Samsung, where its next-gen AI solutions, such as AI5 & AI6, are being made. Elon shared the first pictures of the AI5 chip, freshly taped out of Samsung fabs in South Korea. He also confirmed that plans for the Dojo3 supercomputer are underway, but at some point, the rising demand for AI will prompt firms to open up multiple semiconductor fronts rather than relying on one. Even better is to start your own manufacturing setup, which is what Elon is doing with the Terafab project.
During the TSMC Q1 FY26 earnings call, chairman and CEO, C.C. Wei, shared some of his thoughts on the Terafab project, stating that Tesla and Intel are their customers, and Intel is a very formidable competitor too. He also said that there are no shortcuts to building a fab. It takes 2-3 years to build and another 1-2 years to ramp up. So TSMC's chairman has shown that he is unmoved by the Terafab project.
To this, Elon Musk replied to Wei's recent statement, and clarified that SpaceX & Tesla will always be major customers of TSMC, and not competitors in the normal sense of the word. He also said Tesla's Terafab project is designed to meet their own demand, rather than opening up a new option for fabless chipmakers. It will only address the shortcomings of the industry, which are expected to grow rapidly in the coming years, leading to a highly constrained fab business.
Elon did say that the Terafab project wouldn't be needed if TSMC could make the "Staggeringly" large number of chips his companies required. So see this as a little back and forth, though indirectly. TSMC retains its leading position on the global semiconductor stage, and Elon Musk's Tesla, SpaceX, & xAI are equally important customers for the company.
Elon Musk Tells TSMC's CEO That Terafab Wouldn't Exist if the Foundry Could Keep Up With His Chip Demand
Musk insists SpaceX and Tesla remain TSMC customers, not rivals, even as the Intel-backed Terafab targets its first 3,000 wafers in 2029.
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