By Barbara Kollmeyer

Intel shares are falling after Elon Musk confirmed "discussions" with rival chip maker Taiwan Semiconductor Manufacturing Co. regarding his planned Terafab chipmaking project.

Shares of chip company Intel slipped on Monday, while rival Taiwan Semiconductor Manufacturing Co.'s rose, after Elon Musk confirmed the Taiwanese company could take part in his massive semiconductor manufacturing project.

Some viewed the news as potential competition for Intel (INTC), which in April became the first to offer support for Musk's Texas-based Terafab chip venture. Those shares fell more than 4% in premarket trading, while TSMC shares rose about 3% in Taiwan, and were up 1% in premarket U.S. trading.

Intel shares have gained 223% so far this year versus a 55% gain for Taiwan Semi's U.S.-listed shares.

"In discussions, but something may come of it," Musk replied on X Saturday to a report from an Asian technology Substack Culpium, which cited sources saying the Taiwanese company was looking at ways to help Terafab run those factories.

"Intel is currently slated to supply its 14A process, a role TSMC's own nodes could replace," Oppenheimer semiconductor equity analyst Rick Schafer wrote in a note to clients that published Monday. "One option has TSMC owning and running a fab that serves only Tesla, SpaceX and xAI, while SpaceX invests or commits to volume," he said of the report.

Musk acknowledged, however, in response to a separate X post that any chips from TSCM would likely be supplemental to primary provider Intel.

In March, the billionaire announced plans to develop the chip manufacturing project jointly led by Tesla (TSLA) and SpaceX (SPCX). The companies said they would manufacture 1 terawatt of computing capacity a year - twice as much as needed by the entire U.S. Musk had initially floated a deal with Intel in November 2025, as he noted current partners couldn't make enough of the chips he needed.

At the time, he said SpaceX and Tesla would need as many as 200 billion AI chips per year. Tesla already works with Micron Technology (MU), Samsung Electronics (KR:005930) and TSMC. The latter two will mass-produce Tesla's next-generation AI5 chips next year in Arizona and Texas facilities.

Musk has said Terafab will be a one-of-a-kind facility that can make memory chips, logic chips and packaging, used across his companies, such as humanoid robots, satellites and data centers.

-Barbara Kollmeyer

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10-05-26 0728ET