TSMC Confirms Texas Expansion Talks Amid Record AI Profits

Key points

• TSMC CEO C.C. Wei confirmed the company sent teams to Texas to evaluate expansion options, including the Terafab project.
• TSMC reported Q3 net profit of 763.1 billion new Taiwan dollars ($24 billion), up 69% year-on-year, with revenue at $46 billion.
• Musk stated on X that his companies will build and run the Terafab fabs, with TSMC at most subleasing part of the complex.
• TSMC’s annual capital expenditure budget for 2026 is $60-$64 billion, with spending expected to rise significantly through 2028.
• The company warned of macroeconomic challenges in consumer and price-sensitive markets, prompting prudent planning for 2027.

Background

Earlier reports in October 2026 indicated TSMC was exploring a partnership with Musk’s Terafab to secure a US foothold. This followed Intel’s initial involvement in the project, which saw Intel shares drop when Musk confirmed talks with TSMC, suggesting a shift in manufacturing roles. TSMC stock reached record highs during this period, reflecting market confidence in its advanced chip supply chain.

How outlets are covering it

Nikkei Asia and ABC News report that TSMC is actively evaluating Texas expansion and is open to collaborating with Terafab, emphasizing TSMC’s insistence on running any Texas plant. Mother Jones frames the Terafab project through Musk’s controversial vision of AI supplanting humanity, noting his claim that the facility’s output could rival large economies. While Nikkei and ABC focus on the business and operational details, Mother Jones highlights the ideological and speculative nature of Musk’s projections, contrasting TSMC’s pragmatic expansion strategy with Musk’s grandiose rhetoric.

Why it matters

TSMC’s potential Texas expansion signals a shift in global semiconductor manufacturing, driven by AI demand and US customer requests. The outcome of Terafab talks could redefine the competitive landscape between TSMC and Intel, while TSMC’s record profits underscore the critical role of advanced chips in AI development. However, macroeconomic uncertainties may temper future growth, making strategic expansion decisions crucial for maintaining supply chain dominance.

What to watch

TSMC will continue evaluating Texas sites, with decisions pending on the Terafab collaboration. The company expects higher capital spending through 2028 but will monitor macroeconomic risks. Musk’s Terafab project, recently breaking ground 70 miles northwest of Houston, will proceed with its own manufacturing plans, potentially involving TSMC as a sublessee. Investors will watch for clarity on TSMC’s role and any impact on Intel’s position in the AI chip market.