TSMC has made plain what it wants from any tie-up with Elon Musk’s Terafab venture: the keys to the factory floor. CEO C.C. Wei said Thursday that the chipmaker is in talks over the project but that any plant would have to be run by TSMC itself β a direct counter to Musk’s earlier statement that Terafab would be operated entirely by his own company. No specific terms have been disclosed, so the discussions amount to a negotiating stance rather than a signed partnership.
That distinction matters for investors weighing the company’s capacity story. Talks without a published agreement carry a different weight than steel already in the ground, and TSMC has plenty of the latter.
Arizona Hits a Concrete Milestone
Wei said construction of the company’s second Arizona fab is complete, with tool installation now under way. Volume production is slated for the third quarter of 2027 β modestly ahead of the prior schedule. The plant will turn out chips on the 3-nm process. TSMC has also broken ground in Arizona on a fourth fab and an advanced chip packaging facility, while a further US expansion, Texas included, remains under review with no decision announced.
The demand backdrop explains the urgency. Management sees no cooling in the AI business, and demand for chips built on leading-edge nodes continues to outstrip available supply. Extra plants address an existing bottleneck; who operates them stays on the table.
A Quarter That Grew While the Stock Slipped
The Terafab talks landed against a rough stretch for the shares. TSMC fell 2.5% on Wednesday, caught in a broad technology selloff driven by doubts over how long the AI investment cycle can run, with rising bond yields adding to the pressure. AP reported the wider retreat from tech stocks, while the Taipei Times pointed to foreign investors pulling out of Taiwanese technology names, citing unexpectedly hot US inflation data and fears of higher rates.
Should investors sell immediately? Or is it worth buying TSMC?
The operating numbers tell a different story. For the third quarter of 2026, TSMC reported revenue of NT$1,494.24 billion and net profit of NT$763.06 billion β evidence of robust growth that nonetheless does little to settle questions about industry spending ahead.
Guidance offers a yardstick. For the fourth quarter of 2026, the company projected revenue of US$52.3β54.3 billion, and it reaffirmed capital expenditure of US$60β64 billion for the year. Four new N3 fabs are planned β two in Taiwan, one in the US and one in Japan β spreading the buildout across several sites.
Analysts Lean Against the Tide
Brokerage views have run counter to the selling. Barclays analyst Simon Coles lifted his price target to $670 while keeping an Overweight rating. Needham’s Charles Shi, who had raised his target to $560 on Thursday and maintained a Buy, followed up by nudging that target to $560 from $530, pointing to the expansion plans and the additional growth potential management flagged in AI accelerators.
The next hard data point comes on 10.11.2026, when TSMC publishes its October revenue figures. Until then, the company’s growth expectations and the market’s doubts about the durability of the AI buildout will keep pulling against each other β with Arizona offering a dated production anchor and Terafab, for now, offering only a demand for control.
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