Elon Musk has closed the door on TSMC taking ownership or operational control of Terafab, declaring on October 7 that Tesla and SpaceX will build and run the giant Texas chip plant themselves. The world's largest contract chipmaker, he said, could at most rent space inside it.

"No, we will build and run the fab. Let there be ZERO doubt about that," Musk wrote on X, responding to a post arguing TSMC would most likely end up owning and operating the plant. "Maybe TSMC subleases part of the Terafab if they want, but nothing more than that."

A sublease would let TSMC manufacture chips in a section of the complex, much like a tenant renting one floor of an office tower. The building, the equipment decisions and daily operations would stay with Tesla and SpaceX.

What changed in five days?

The statement ends a week of speculation that began on October 2, when tech journalist Tim Culpan reported TSMC was exploring ways to help run Terafab's factories. Musk initially left the door open, replying on October 3 that the talks were "just discussions, but something may come of it." That wording had allowed for a scenario in which TSMC — the industry's most experienced foundry operator — took the wheel.

Culpan had outlined a structure in which TSMC acted as an anchor partner, contributing process expertise and capacity while Terafab provided capital and long-term purchase commitments. Musk's latest post rules out anything beyond a possible sublease.

Why control matters for a $119 billion project

Terafab is not a marginal bet. Musk unveiled the project in March as a joint effort between Tesla, SpaceX and xAI, arguing that existing suppliers cannot expand fast enough to meet his companies' future demand. The target: enough chips each year to supply one terawatt of computing power — roughly 50 times what the entire global AI chip industry currently produces.

The output is earmarked for concrete product lines:

• Tesla's Optimus humanoid robots
• The Cybercab robotaxi
• Full Self-Driving computers
• Chips for SpaceX's planned orbital data centers

Today Tesla designs its own AI chips but pays outside manufacturers, including TSMC and Samsung, to fabricate them. Owning the factory removes Musk's companies from the queue for capacity on someone else's lines — a shortage risk Tesla has managed before, sourcing chips during the COVID crunch.

The commercial footprint is already committed. SpaceX confirmed the Grimes County site, about an hour from Houston, in August, sent the county a $10 million payment under its tax abatement deal, and said civil work would begin shortly. The first phase carries a $16.8 billion price tag. Total spending across all phases could reach $119 billion.

Where does that leave TSMC and Intel?

TSMC chairman C.C. Wei has said a new fab typically takes two to three years to build and another one to two years to reach full output. Tesla and SpaceX have never operated one, which is precisely why TSMC's possible involvement drew so much attention. Musk's answer signals he would rather absorb that learning curve in house than hand control of a project central to Tesla's robotics and autonomy roadmap to an outside company.

Intel remains part of the picture. The company signed on in April to help design, build and package chips for the project, and Intel CEO Lip-Bu Tan told Bloomberg this week that Intel will keep working on Terafab despite the TSMC chatter. Intel is expected to supply its 14A manufacturing process for the full-scale plant.

Musk, for his part, has said TSMC and Samsung remain important for near-term needs; Tesla already has production arrangements with Samsung for its AI5 and AI6 chips.

Musk has also staked prestige on the site itself. "Terafab Texas will be the largest and most valuable building on Earth by far," he posted in August. "And it will be stunningly beautiful."

With TSMC confined at most to a sublease and Intel locked in on process technology and packaging, Tesla and SpaceX will now have to prove they can ramp a leading-edge fab themselves — starting from a $16.8 billion first phase in Grimes County.