[News] TSMC Sends Team to Assess Texas Fab Expansion, Confirms Terafab Talks but Insists on Operating Control

TSMC is considering expanding its U.S. manufacturing footprint into Texas as growing demand from American customers prompts the chipmaker to evaluate additional capacity beyond Arizona. Speaking at TSMC‘s third-quarter 2026 earnings call on October 15, Chairman and CEO C.C. Wei said the company has already sent teams to Texas to assess conditions for a potential expansion.

Wei noted that TSMC has a large U.S. customer base, with clients urging the company to expand its manufacturing presence in the country. He also highlighted support from the US government as a factor in its consideration of further investment. While Arizona remains central to TSMC’s U.S. manufacturing strategy, Texas is now among the locations under evaluation.

Addressing recent speculation about TSMC’s potential involvement in Terafab, Wei confirmed that the company is in discussions over the project but said the outcome remains uncertain. He emphasized, however, that any fab involving TSMC would have to be operated by the company itself.

The remarks follow a different position outlined by Elon Musk on October 7. According to Reuters, Musk said his companies would build and operate Terafab, suggesting that TSMC could potentially sublease part of the facility but would not take an operational role. With Wei now emphasizing that any fab involving TSMC must be operated by the chipmaker, the potential structure of a partnership remains uncertain.

Intel, meanwhile, is also expected to remain involved in the Terafab project. According to Reuters, citing Bloomberg, Intel CEO Lip-Bu Tan said the company would remain involved in Terafab.

TSMC Outlines Global Fab Expansion Plans and Overseas Margin Impact

As TSMC expands its global manufacturing footprint, the company expects gross margin dilution from overseas fabs to be closer to 2 percentage points in 2026, widening to 3–4 percentage points over the next few years as more overseas fabs ramp up production.

TSMC said it is actively expanding its manufacturing network worldwide, with nearly 20 fabs, including 13 in Taiwan and approximately five to six overseas facilities under construction.

To support sustained demand for its N3 node over the coming years, TSMC is adding manufacturing capacity across multiple locations. In Taiwan, volume production at its new fab in the Tainan Science Park remains on track to begin in the first half of 2027. The company has also decided to add another fab in Tainan, with volume production scheduled for the first half of 2028.

In Arizona, construction of TSMC’s second fab has been completed, and equipment installation is underway. Volume production is expected to begin in the third quarter of 2027, slightly ahead of schedule. Meanwhile, TSMC plans to begin 3nm volume production at its second fab in Japan in 2028.

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(Photo credit: TSMC)