TSMC Explores Texas Investment and Negotiates Role in Elon Musk's Terafab Project

Taiwan Semiconductor Manufacturing Co. (TSMC) is exploring investment in Texas on 15 October 2026 to further expand chip production in the US. The world's largest semiconductor contract manufacturer confirmed during quarterly earnings that assessment teams were dispatched to Texas to evaluate a possible involvement in Elon Musk's planned "Terafab" manufacturing complex. TSMC CEO C.C. Wei stated the plans are still in the evaluation phase.

Negotiations with Musk over Terafab Project

TSMC is in talks about a role in Elon Musk's planned Terafab project. Wei clarified that a Texas facility would need to be operated by TSMC should the company participate. Musk commented on the discussions in early October 2026 on X and took a different position: while he confirmed talks with TSMC, he emphasised that his company would build and operate the factory. TSMC could at most sublease part of the facility, Musk said.

The different positions suggest that negotiations over operational control are not yet concluded. TSMC currently controls over 90 percent of global production of the most advanced semiconductors and supplies US technology companies such as Nvidia and Apple.

Record Profit Driven by AI Demand

In the third quarter of 2026, TSMC recorded a net profit of 763.1 billion new Taiwan dollars, equivalent to approximately 24 billion US dollars. This represents an increase of 69 percent compared to the previous year. Revenue climbed 51 percent to 1.49 trillion Taiwan dollars (around 46 billion US dollars).

CEO Wei pointed to sustained strong demand from the artificial intelligence sector. Demand currently far exceeds TSMC's production capacity. The company is working intensively to close this gap and is expanding capacity at the request of most major US customers, Wei said.

Existing US Investments in Arizona

TSMC had already committed substantial funds to the US location prior to the Texas exploration. The company committed to total investments of 265 billion US dollars for the construction of plants in Arizona. Alone in July 2026 the chip manufacturer announced an additional 100 billion US dollars for Arizona.

Capital expenditures for the current year amount to 60 to 64 billion US dollars – a significant increase compared to the previous guidance of 52 to 56 billion US dollars. Chief Financial Officer Wendell Huang explained during the conference call that spending between 2026 and 2028 would be significantly higher than in the past three years.

Significance for Global Chip Supply Chains

The possible Texas expansion should be viewed against the backdrop of geopolitical tensions and US efforts to establish critical semiconductor capacity on domestic soil. TSMC, headquartered in Taiwan, is at the centre of global supply chains for high-performance chips used in data centres, smartphones and automobiles.

TSMC's quarterly results are regarded as a barometer for global developments in artificial intelligence during the global expansion of AI computing power. However, the company warned of macroeconomic challenges and observed weaknesses in consumer-oriented and price-sensitive market segments.

The planned presence in Texas would create a second major US manufacturing site for TSMC alongside Arizona. A final decision on the project is still pending.