Intel CEO Lip-Bu Tan confirms Intel remains part of Elon Musk's Terafab cleanroom project despite TSMC sublease discussions.

Intel will continue its involvement in Terafab, according to Intel CEO Lip-Bu Tan, who told reporters on Wednesday that the semiconductor production venture remains a going concern. At the same time, Elon Musk, chief executive of SpaceX, Tesla, and xAI, made clear that Terafab will build and operate its own fabrication plant while proposing that TSMC sublease a portion of the facility to manufacture chips for its customers.

In April, Intel and Terafab announced that the new chipmaker would use Intel's next-generation 14A fabrication process. While the full scope of collaboration remains undisclosed, the general understanding is that Intel will license its manufacturing technology to Terafab, though it is unclear whether Intel will assist in ramping production at the node.

Musk's comments directly addressed rumors that his companies would invest in Terafab and then cede operation of the fab to TSMC entirely. Instead, he has proposed a different arrangement. "No, we will build and run the fab," Musk wrote in an X post. "Let there be ZERO doubt about that. Maybe TSMC subleases part of the Terafab if they want, but nothing more than that."

The proposal is unusual for several reasons. TSMC, the world's largest foundry, operates dozens of advanced 300-millimeter fabs globally and is pursuing aggressive expansion plans with roughly ten new fab phases in the coming years. It has little incentive to sublease capacity from a third party when it can build its own facilities.

More fundamentally, semiconductor fabs are not interchangeable spaces. If Terafab initially qualifies its facilities around Intel's 14A process technology, converting part of the building to support TSMC's A14, A13, or A12 processes would require different equipment configurations, process flows, materials handling, contamination controls, and qualification protocols. While TSMC could theoretically install an independent production line within the same structure, that arrangement would essentially amount to TSMC building and operating its own fab on Musk-controlled land rather than simply renting spare capacity.

An Intel license to Terafab would almost certainly include extensive provisions governing access to Intel's intellectual property, process information, equipment configurations, and personnel. Housing TSMC's engineering and manufacturing teams in the same facility risks creating contractual and IP-isolation complications, even if TSMC never directly accesses the Intel production line. Intellectual property protection at such a facility would be extraordinarily complex and costly.

A dual-occupancy scenario also creates operational complications. If shared infrastructure—the power distribution system, water treatment plant, chemical systems, or cooling installation—fails and disrupts production at either operation, determining responsibility and financial liability for potentially hundreds of millions of dollars in affected wafers would be far more complicated than at a single-operator facility.

Finally, if Terafab can supply the manufacturing capacity needed by Tesla, SpaceX, and xAI while still retaining substantial capacity to offer TSMC by the end of the decade, it raises questions about whether the project has significantly overbuilt capacity in its initial phases.

Because Musk's public statements are deliberately vague, the precise arrangement remains unclear. There may be a fundamental tension in the proposal itself: if TSMC installs its own equipment, staffs its own workforce, and manages production while Terafab provides only land, building shell, and infrastructure, calling this a "sublease" mischaracterizes what would effectively be a TSMC-operated fab embedded within the Terafab campus. Conversely, if Terafab provides the tools and infrastructure while TSMC merely operates them, the arrangement approaches the kind of TSMC operational control that Musk appears intent on denying.

While Intel has reaffirmed its involvement and Musk has signaled openness to TSMC participation, his latest comments raise more questions than they resolve.