Semiconductor giant Taiwan Semiconductor Manufacturing (NYSE: TSM) is considering a partnership with Elon Musk's Terafab project to establish advanced end-to-end semiconductor manufacturing capacity in the United States.

According to an exclusive report from the newsletter Culpium, the news was subsequently confirmed by Musk on the X platform. The two companies are in discussions to form a joint venture aimed at expanding domestic semiconductor manufacturing scale in the United States.

The proposal envisions Taiwan Semiconductor Manufacturing (NYSE: TSM) taking responsibility for developing wafer fabrication capabilities, while Terafab would provide financial support, equity investment, procurement agreements, and other supporting conditions necessary to ensure the new fab's capacity operates smoothly.

Some corporate executives believe that Intel may not be able to fulfill its commitments, which is why Terafab needs to acquire technological capabilities through dual channels. Prior reports indicated that Intel has already reached a cooperation agreement with Terafab.

At the Terafab AI chip complex project in Austin, Tesla Motors (NASDAQ: TSLA) will become Intel's first major customer for its 14A process node. However, details of this deal remain unclear, including whether Terafab will be able to obtain licensing for the 14A node's Process Design Kit (PDK).

Taiwan Semiconductor Manufacturing (NYSE: TSM) and Intel could theoretically coexist within the Terafab project, but it should be noted that Taiwan Semiconductor Manufacturing may not bring its most cutting-edge semiconductor technology to the United States. Its most advanced processes will remain at its headquarters, with Terafab serving only as a secondary project.

Intel and Taiwan Semiconductor Manufacturing (NYSE: TSM) may complement each other in terms of technological needs, but this remains uncertain at present.

Terafab's goal is to integrate the entire chip manufacturing process within a single factory complex. The facility plans to combine logic chip manufacturing, memory chips, packaging, testing, and mask production across multiple stages at a single site. In industry practice, these processes are typically distributed across multiple specialized factories and different companies, making this model highly unusual.

Simply injecting capital does not guarantee project success. Building a competitive wafer fab from scratch requires years of implementation time. Equipment must be procured from manufacturers such as ASML, Lam Research, KLA, and Tokyo Electron. These equipment suppliers often receive orders years in advance before delivering equipment to Taiwan Semiconductor Manufacturing (NYSE: TSM), Samsung, and Intel. Therefore, building the supply chain for equipment, raw materials, and components will also take several years.

The report states that Terafab has already placed orders for manufacturing equipment with the aforementioned equipment manufacturers, and the first silicon wafers are not expected to be produced for several years.