TSMC's US stock closed up 2.8%, while Intel's stock, which joined the Terafab project in April this year, fell 2.6%. Musk confirmed on social media that preliminary discussions have begun with TSMC regarding the Terafab project. According to reports, industry insiders estimate that the probability of TSMC cooperating with Terafab is over 80%.

TSMC's potential collaboration with Elon Musk's Terafab Superfab is becoming the most highly anticipated deal in the semiconductor industry. Industry insiders estimate that the likelihood of a collaboration between the two parties exceeds 80%, and the market has already reacted to this news.

On Monday, TSMC's US stock ( TSM ) reached a historical high of $487.44 during trading, closing up about 2.8% at $485.80, also setting a new all-time high. Its market value for the first time exceeded $2.5 trillion, with an annual increase of over 60%.

The driving force behind TSMC's rising stock price this time comes from Elon Musk himself. He personally confirmed on the social media platform X that preliminary discussions are underway with TSMC regarding the Terafab project, stating, "It's just a discussion, but there might be results." TSMC's official stance, however, remains low-key as usual, with no public response given.

Meanwhile, Intel's stock price, which joined the Terafab project in April of this year, fell by about 2.6% on Monday, marking three consecutive trading days of decline. The possibility of TSMC getting involved directly impacted market expectations regarding Intel's position in that project.

Cooperation probability exceeds 80%: Dezhou wafer factory forms a natural synergy

According to Taiwanese technology media Digitimes, industry insiders estimate that the probability of a collaboration between TSMC and Terafab has exceeded 80%. The core logic behind this judgment is that TSMC's wafer factory expansion plan underway in Texas, USA, highly overlaps with the site selection of Terafab.

Mizuho Securities Trading Desk Analyst Jordan Klein pointed out in a client report that TSMC is exploring the establishment of a new manufacturing center in Texas, USA. "This is very likely to be part of that project, and Musk will become one of the key anchor customers." He also stated that the Terafab project may ultimately be shared or undertaken separately by TSMC and Intel.

It is reported that TSMC is evaluating the establishment and operation of a wafer factory dedicated to serving Tesla, SpaceX, and xAI. The most likely transaction structure is that TSMC will be responsible for owning and operating the wafer factory, while SpaceX will provide support through investment in shares, commitment to purchase volumes, or a combination of both. Several industry insiders revealed to the media that the two parties have indeed had contact, but they are still "a long way from signing a contract," and at present, it is more like they are in the "dating stage."

TSMC's Silence: Negotiation Chips and Strategic Considerations

In the face of Musk's public confirmation, TSMC chose to remain silent, which in itself is a negotiating tactic. As the world's largest wafer foundry, TSMC's monopoly position in advanced manufacturing processes gives it substantial bargaining power.

Analyst Matt Bryson reiterated the 'outperforming the market' rating for TSMC after the announcement. Jordan Klein also stated that the cooperation between TSMC and Terafab is 'completely reasonable, as they are recognized as the world's most proficient in manufacturing semiconductors for large-scale advanced nodes.'

TSMC's silence also reflects its consistent caution in customer relationship management. The company's current clients include technology giants such as Apple, NVIDIA, and AMD. Any public statement regarding capacity allocation could provoke sensitive reactions from some of its clients. In the absence of a finalized cooperation structure, maintaining a low profile serves both as a negotiation strategy and as a means to protect existing customer relationships.

Customer Structure and Competitive Landscape: Intel Bears the Brunt

If TSMC officially joins Terafab, the impact on the industry's competitive landscape will be multi-dimensional.

For Intel, the impact is most direct. In April of this year, Intel joined Terafab as a naming partner and is involved in the manufacturing technology planning for that facility. TSMC's potential involvement means that Intel's core position in the project may be diluted, which also explains the significant decline in Intel's stock price on that day.

For Samsung, if TSMC locks in companies under Musk as its long-term anchor customers, it will further solidify its leading position in the advanced manufacturing process foundry market, reducing Samsung's chances of competing for high-end AI chip orders.

At the level of production capacity allocation, the initial design intention of the Terafab project was to provide custom chips for Tesla, SpaceX, and xAI to meet their continuously expanding computing power demands. If TSMC undertakes this exclusive production capacity, it means that its manufacturing layout in the United States will add a relatively independent supply chain, which will be distinct from the production capacities serving existing customers such as Apple and NVIDIA.

Stock prices hit new highs: The market has priced in these developments in advance, with both catalysts and risks coexisting.

TSMC's stock price had already risen by more than 60% before the news was confirmed, breaking through the cup-bottom buying point of $479 on that day, and the relative strength line also reached a new high, indicating a bullish technical signal. Investor's Business Daily listed TSMC as a "Top Stock of the Day".

However, the rapid market response has also brought concerns regarding valuation. TSMC's stock price is currently more than 10% above its 50-day moving average. Analysts point out that although the breakout signal is clear, there is pressure for the stock price to consolidate in the short term.

In terms of potential subsequent catalysts, TSMC's monthly revenue report for September will be released on Thursday, which is the next important milestone that the market is watching. Additionally, the quarterly financial report on October 15th will provide more forward-looking guidance on capacity planning and customer demand. Whether management will make a statement regarding the Terafab collaboration at that time will become a focus for the market.

On the risk front, the cooperation negotiations are still in their very early stages, and Elon Musk himself has clearly stated that the outcome is still uncertain. If the negotiations ultimately do not progress to a signing, or if there is a significant discrepancy between the proposed cooperation structure and market expectations, the stock price, which is currently priced based on some assumptions of cooperation, will face downward pressure.

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