Intel shares fell more than 4% in premarket trading on Monday after reports suggested that TSMC is discussing a potential partnership with Elon Musk’s Terafab semiconductor project.
The development has raised fresh questions about Intel’s role in the massive Texas chipmaking venture. Until now, Intel had been the only publicly named manufacturing partner for the project.
TSMC Discusses Potential Terafab Partnership
Intel joined the Terafab project in April 2026. Its next-generation 14A manufacturing node was selected as the only publicly announced process technology for the facility.
However, TSMC could now become involved in the project as well.
TSMC’s U.S.-listed ADRs gained around 1% in premarket trading after Elon Musk confirmed that discussions with the Taiwanese semiconductor giant are underway. TSMC shares listed in Taiwan finished Monday about 3% higher.
Musk confirmed the talks in a post on X on Sunday, October 4. He described the discussions as preliminary while acknowledging that they could eventually lead to an agreement.
His comments followed an October 2 report from the Culpium newsletter, which said TSMC was examining ways to support Terafab’s planned semiconductor factories in Texas.
TSMC Could Operate the Texas Chip Facility
According to Culpium, one possible structure would involve TSMC owning and operating the semiconductor facility while Terafab acts as its anchor customer.
Such an arrangement would resemble other international TSMC projects, including its JASM venture in Japan and ESMC partnership in Germany.
A deal with Terafab would come in addition to TSMC’s significant U.S. expansion plans.
The chipmaker has already committed around $265 billion to a 12-facility semiconductor complex in Arizona.
Terafab Could Become a Massive Semiconductor Project
Terafab is being developed by Tesla and SpaceX in Grimes County, Texas, approximately 100 kilometers northwest of Houston.
An announcement on August 6 committed approximately $16.8 billion to the project’s first phase.
County filings reportedly indicate that total investment could eventually reach as much as $119 billion across several development phases.
Production from the facilities is expected to support semiconductor demand from Tesla, SpaceX and xAI.
Reports had previously indicated that TSMC was separately considering additional semiconductor investment in Texas beyond its existing Arizona expansion.
Intel Faces Growing CPU Market Share Pressure
The potential TSMC involvement comes as Intel is already facing increasing competitive pressure in the processor market.
Susquehanna analysts said Intel likely continued losing CPU model share in both laptop and desktop computers during the third quarter.
AMD gained ground, while Qualcomm increased its presence in the laptop market to its highest level recorded in the analysis.
Susquehanna estimates that Intel’s overall model share declined by 3.9 percentage points quarter over quarter to approximately 68.1%.
AMD’s share increased by about 3.1 percentage points to 29.3%, while Qualcomm edged higher to roughly 2.2%.
Intel Panther Lake Adoption Begins to Increase
There were some encouraging signs for Intel’s upcoming processor lineup.
The company’s new Panther Lake processor, which uses Intel’s 18A manufacturing process, represented approximately 1.8% of Intel-powered laptop models during the quarter.
That was up from only 0.4% in the previous quarter.
According to Susquehanna, Panther Lake adoption is progressing faster than Intel’s previous Lunar Lake rollout and is roughly consistent with the trajectory seen with Arrow Lake.
Intel Desktop Share Falls to Multi-Year Low
Intel also continued to lose ground in desktop computers.
Its desktop model share declined approximately 1.6 percentage points quarter over quarter to around 76%.
That represented Intel’s lowest desktop share in Susquehanna’s study since the second quarter of 2023.
The combination of falling CPU market share and uncertainty surrounding Intel’s position in the Terafab project has added fresh pressure on Intel stock.
Investors will now watch closely for further details about the potential TSMC partnership, as well as signs that Intel’s upcoming processors can help the company regain momentum against AMD and Qualcomm.
