TSMC Weighs Texas Expansion, Holds Talks on Musk's Terafab as AI Demand Outpaces Supply — Update

By Sherry Qin

Taiwan Semiconductor Manufacturing Co. raised the prospect of additional U.S. manufacturing capacity beyond Arizona, including in Texas, as demand for artificial-intelligence chips continued to outpace supply despite a wave of capacity additions across the industry.

The world's largest contract chip maker on Thursday signaled its willingness to participate in large-scale AI infrastructure projects, such as Elon Musk's proposed Terafab initiative, underscoring how major technology companies are exploring new ways to secure the semiconductor capacity needed for the next phase of AI deployment.

Chief Executive C.C. Wei said TSMC has dispatched teams to Texas to evaluate potential expansion opportunities. He also confirmed the company has held discussions regarding the Terafab project, though talks are continuing and no decision has been finalized.

He said the company remains open to either a partnership or owning facilities outright, though he added that any fab producing TSMC chips will need to be operated by TSMC. Earlier this month, while confirming early talks with TSMC, Musk said on X that Tesla and SpaceX will build and run the facility.

The discussions come as TSMC accelerates its U.S. expansion plans. The company in July pledged an additional US$100 billion investment in Arizona, bringing its total commitment in the state to US$265 billion, as demand for AI processors and related semiconductors continues to surge.

TSMC maintained its capital-expenditure target of US$60 billion to US$64 billion this year, reaffirming one of the largest investment programs in the semiconductor industry. Looking beyond 2026, the company said it sees significant upside through 2028 to meet soaring AI infrastructure demand. Some analysts have projected TSMC's capital expenditure to exceed US$80 billion in 2027.

Addressing concerns about its surging capital spending potentially fueling an AI bubble, Wei said TSMC has a disciplined internal capacity-assessment system to check the data-center buildout.

"We have a very good idea of our customers' multiyear product roadmap," Wei said.

TSMC on Thursday reported a better-than-expected 69% jump in third-quarter net profit to 763.06 billion New Taiwan dollars, equivalent to US$23.71 billion. Revenue was NT$1.494 trillion, up 51% from a year earlier.

It projected fourth-quarter revenue of between US$52.3 billion and US$54.3 billion, citing continued demand for AI processors and high-performance computing applications. It raised its annual revenue growth guidance to around 44% from "slightly over 40%" in July, upgrading the forecast for the third time this year.

Still, TSMC's main challenge remains keeping pace with client demand to bridge the supply gap while it defends its lead over rivals like Samsung and Intel and navigates the shift toward custom, in-house silicon by tech leaders like Musk.

Wei said the Taiwanese chip giant plans to pursue every available growth opportunity.

"We have no intention to leave food on the table for others," he said.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

October 15, 2026 05:26 ET (09:26 GMT)