Wei says TSMC must run the fab in any deal with Musk's Terafab

Wei gave the answer on the third-quarter earnings call on Thursday, when asked whether TSMC was joining Musk's chipmaking venture ^[5][2]. He said, "We are still in discussion, let me say that," and then, "But the fab has got to be run by TSMC." ^[3] Musk's side has taken the opposite line, that his companies would be solely in charge at Terafab ^[7].

That weakens Musk's earlier description of TSMC's role only in part. Bloomberg reported that he said TSMC would at most lease capacity and would not run manufacturing ^[6]. Wei's answer describes a company asking to operate the plant. That is a larger ask than leasing out capacity, but it is a condition and not a term. Bloomberg wrote that neither side has specified the parameters of any arrangement beyond confirming the talks ^[4], and SCMP wrote that discussions had no firm conclusion, with the ownership structure and scope of TSMC's possible role unclear ^[9]. Nobody has said what "run" covers.

The reports leave three endings open. TSMC could operate a plant that Musk's companies own, and Musk would have to give up the line that they alone are in charge ^[2][7]. Musk's companies could build and run Terafab themselves and leave TSMC out ^[7]. Or the talks could narrow to TSMC-run capacity in Texas that a Terafab customer buys. SCMP's account fits that third version, since TSMC already has teams in Texas and Wei described a customer weighing capacity at the complex there ^[11][12]. The report does not say whose complex that is.

We think the third is the likeliest, because it is the only one in which neither executive has to retract a sentence. TSMC would not hand operations to a customer ^[2]. Musk's companies would not depend on TSMC for the technology, since Intel is already helping with it ^[10].

We would be wrong if a Terafab plant emerges with Musk's staff operating the line and TSMC in a supporting role. Wei's word "run" would then have meant less than it sounds ^[3].