Intel announced its participation in a projectcalled “Terafab”in collaboration with SpaceX, xAI, and Tesla to advance next-generation semiconductor manufacturing technology. The goal is to leverage its expertise in chip design and high-end chips to help Elon Musk build computing capacity exceeding 1 terawatt per year (1 TW/year) to support future AI and robotics growth.
Terafab is a $25 billion semiconductor manufacturing plant project located in Austin, Texas, initiated by Elon Musk. It aims to control advanced chip production end-to-end to reduce reliance on external manufacturers, as current chip producers cannot meet the speed and volume demands of companies like Tesla, SpaceX, and xAI that seek to address rapidly growing AI and robotics markets.
Terafab represents a major bet by Elon Musk to establish his own computing resources independent of others. Musk has revealed that Terafab aims to produce 100-200 gigawatts per year on Earth, scaling up to 1 terawatt in space, supporting large-scale AI tasks, satellites, autonomous vehicles, humanoid robots, and data centers.
However, building a chip manufacturing plant is among the most complex and capital-intensive infrastructure projects in business. Terafab is thus seen as a highly challenging venture for SpaceX, Tesla, and Musk, who lack prior semiconductor manufacturing experience.
Intel’s entry, as a leading U.S. chip manufacturer, clarifies the project’s direction since the company has comprehensive semiconductor industry experience and is seeking major clients to support its foundry business, with SpaceX and Tesla potentially becoming key customers.
Lip-Bu Tan, Intel’s current CEO, stated that the company will participate in this AI chip production center project to develop processors supporting robotics and data center visions. Intel’s capabilities will accelerate Terafab’s goals driven by Elon Musk, a transformative figure in the tech industry, fulfilling a crucial semiconductor industry need. Terafab will mark an important step in future chip manufacturing. Following the announcement of this collaboration, Intel’s stock rose over 3%, trading at $52.28, up about 2.9% from the market open.
For Intel, which had previously lagged behind competitors in AI chip innovation, this deal is a significant boost to investor confidence amid signs of recovery driven by increased chip demand.
Under Lip-Bu Tan’s leadership, now over a year in place, Intel is aggressively pursuing business revitalization through organizational restructuring and capital raising via partnerships and government support. This has attracted multi-billion-dollar investments from Nvidia and the U.S. government, now the largest shareholders.
Gil Luria, an analyst at D.A. Davidson, noted that Intel must prove its ability to support major customers on critical projects, and this partnership with Tesla may be an early indication of such capability.
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