Elon Musk Sought Chip Plants From Intel, TSMC and Micron Before Pivoting to Partnerships for Terafab
Before embarking on his ambitious Terafab semiconductor manufacturing project, Elon Musk initially attempted to purchase existing chip production facilities from industry leaders Intel, TSMC, and Micron, according to a report from Korean media. After being turned down by those major manufacturers, the Tesla and SpaceX chief executive shifted strategy toward partnerships to advance his long-term production goals.
Despite those initial setbacks, the Terafab project has moved forward with striking speed, surprising various suppliers involved in the endeavor. Engineers working on the project have reportedly been granted significant decision-making authority, accelerating development. Industry observers anticipate that Terafab will achieve an initial production output of 100,000 wafers per month prior to 2030, before eventually scaling toward Musk’s ultimate target of one million wafers per month.
Even with an initial output goal of 100,000 wafers monthly, that volume would remain a small fraction of the broader global semiconductor manufacturing industry. By comparison, industry giant TSMC alone projects it will manufacture 120,000 wafers utilizing its leading-edge 2-nanometer manufacturing technology by the end of 2026.
Terafab has already engaged in discussions and business relationships with various suppliers, including American firms Lam Research and Applied Materials, alongside multiple Korean suppliers providing essential semiconductor supply chain materials such as piping, polishing slurries, and cleaning chemicals. Among the partnerships forged, Intel has directly aligned with Terafab and will collaborate on the project utilizing its 14A manufacturing technology.
Discussions regarding potential manufacturing roles have also touched on Taiwan’s TSMC. Musk previously clarified that any involvement by TSMC would be limited to that of a subcontractor. Meanwhile, TSMC CEO Dr. C.C. Wei stated during a recent earnings call that his firm had held discussions with Musk, while emphasizing that TSMC must maintain operational control of its plants for any partnership to function.
Terafab forms a central component of Musk’s broader strategy to manufacture sufficient chips to power autonomous vehicles, humanoid robots like Optimus, and other technology ventures. These technological developments underpin the executive’s expansive long-term economic visions beyond Earth.
In an appearance on a podcast recorded in August with biographer Walter Isaacson, Musk contrasted virtual artificial intelligence with physical AI. He suggested that physical AI carries exponentially greater value because it can execute real-world tasks, such as operating science laboratories and running physical experiments.
While Musk estimated that digital superintelligence might boost Earth’s economy by 20 to 30 percent—representing an incremental increase of roughly $30 trillion annually—he argued that robotics and space expansion could unlock vastly greater economic scale. By utilizing robots to enable space exploration and deploying systems like a mass driver on the Moon, Musk contended that the resulting economic output could potentially reach a million times the size of Earth’s economy.
