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Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenuA possible deal between Elon Musk and Taiwan Semiconductor Manufacturing involving Terafab , the huge semiconductor factory in Texas that the tech CEO is building, could be bad news for incumbent SpaceX partner Intel , which saw its stock tumble Tuesday for a second day in a row. Intel shares dropped 3% on Monday and are down another 3% in Tuesday trading. TSMC shares were slightly lower in Tuesday trading, but are up 2.4% week to date. Since Musk confirmed the talks, Wall Street analysts have speculated that the discussions are focused on either targeted component designs for robotics, autos and AI chips or a broader agreement concerning intellectual property, manufacturing processes or even a joint operation. INTC 5D mountain INTC 5 day. ‘Just discussions’ Musk confirmed Saturday that talks were happening with the Taiwanese chip giant, saying in a post on his social media platform X, that they were “just discussions, but something may come of it.” Also on Saturday, Musk responded to a post describing TSMC’s potential contribution to Terafab as supplemental with the comment, “True.” Bank of America analyst Haas Liu said in a Monday note to clients that the deal is likely to be more about component purchases for Musk’s product lines across SpaceX and Tesla . “We expect a deeper collaboration as Tesla and SpaceX grow at TSMC (2-3% of its sales) directly with their auto/robotics and cloud AI ASICs and indirectly through merchant HPC chipset buys (e.g. GPUs, networking switches),” Lui wrote. “The likelihood of TSMC licensing technology or operating a fab with Terafab holding a meaningful share should be low,” he added. SPCX 5D mountain SPCX 5 day. Others think a broader deal could be in the works concerning foundry processes for the complex business of making semiconductors. “There’s always commercial terms that make sense,” Gil Luria, head of technology research at DA Davidson, told CNBC. “TSMC can limit what they give him. … If you’re just selling intellectual property, that comes in at nearly 100% margins.” Semiconductor industry expert Chris Miller at the American Enterprise Institute said there’s a long history of this type of licensing collaboration and co-development of products within the industry. “That [wouldn’t be] new at all,” he said. “You can defray the cost of the R & D. [There are also advantages] if you think somebody else is better placed to operate a manufacturing plant in a different geography.” Opinions were more unified regarding the potential implications for Intel. Added competition for Intel A TSMC-Musk deal would “add competition to the initial partnership announced between Musk and INTC for Terafab back in Spring,” Mizuho analyst Jordan Klein said. He called it “great news for TSM” and “a modest neg for the INTC bulls.” “In the end, it doesn’t negate or take away from the INTC bull case of winning new external foundry customers as Terafab still likely in some form,” he added. Year to date, Intel shares have more than tripled, while TSMC has gained almost 60%. Concerning the implications of TSMC deal for Intel, DA Davidson’s Luria said, “Intel’s investors are wearing rose-colored glasses right now.”Read More