Tesla shares rose about 1% in overnight trading after Elon Musk confirmed discussions between TSMC and Terafab, the semiconductor project intended to supply Tesla, SpaceX and xAI. His wording set a clear limit on the news: “Just discussions, but something may come of it.”
The move followed a 5% gain on Friday, when Tesla closed at $370.59 after third-quarter deliveries exceeded expectations. The shares still finished the week down about 0.4%, leaving Monday’s early move as a modest extension of the deliveries rally rather than evidence that investors have priced in a completed manufacturing agreement.
What Musk Actually Confirmed
Musk posted the comment on October 3 in response to reporting that TSMC was exploring ways to work with Terafab. He confirmed that discussions exist, but disclosed no contract, timetable, ownership structure, production process or capital allocation.
That distinction matters for Tesla stock. Terafab is part of the company’s effort to secure the computing capacity required for autonomous driving, Optimus and artificial intelligence, but its economic impact cannot be estimated from the information available. Investors do not yet know how much Tesla would fund, which company would own the factories or when production could begin.
The Two Scenarios Reported By Culpium
Tim Culpan reported through Culpium that TSMC is considering ways to participate in the Texas manufacturing project. The leading scenario would have TSMC own and operate the new factories, with SpaceX or Terafab investing in the facilities, guaranteeing chip purchases, or using a combination of those arrangements.
These are reported scenarios, not agreed terms. Culpan said the plans were not fixed and that other structures were being considered. Musk’s later post confirmed the discussions but did not endorse any particular ownership model.
The structure would determine where the risk sits. TSMC ownership could bring manufacturing experience and process technology while limiting the operational burden on Musk’s companies. Purchase guarantees or direct investment could still leave Tesla, SpaceX and xAI responsible for supporting enough demand to justify the capacity.
Intel Remains The Only Other Named Collaborator
Intel is the only other semiconductor manufacturer publicly named in connection with Terafab. Musk previously said the project would use Intel’s 14A manufacturing process, making Intel relevant even as TSMC enters the discussion.
Nothing disclosed by Musk shows that Intel has been removed. TSMC could compete for part of the project, operate separate capacity or participate through a structure that has not been reported. The technical choice matters because factories are designed around specific manufacturing processes, equipment, intellectual property and supply chains rather than switched between chipmakers without cost.
Terafab is intended to supply Tesla, SpaceX and xAI rather than operate as a general-purpose foundry for outside customers. That concentration could give the factories committed demand, but it would also tie utilisation to the spending plans and product schedules of three Musk-controlled companies.
Tesla’s Friday Rally Came From Deliveries
Tesla delivered 486,532 vehicles in the third quarter, above a consensus estimate of about 461,000. The result sent the shares up roughly 5% on Friday to $370.59, their strongest session in a month.
The deliveries figure belongs in the background rather than the Terafab thesis. It provided the immediate reason for Friday’s move, while the overnight gain followed Musk’s confirmation. Combining both developments into one narrative would overstate what the semiconductor discussions added to the stock.
What Would Turn Discussions Into A Material Event
The next meaningful evidence would be a signed manufacturing contract, disclosed capital spending, purchase guarantees, site details or a statement from TSMC. TSMC declined to comment to Reuters on the broader report that it was evaluating a Texas investment, but that response did not specifically confirm or deny a Terafab arrangement.
Until one of the companies supplies terms, investors cannot calculate capacity, costs or a production date. Musk has confirmed that TSMC is at the table. He has not confirmed what either side is prepared to build or pay for.
