Intel Comes On Board for Musk’s Terafab AI Chip Project
The company will help accelerate Terafab’s goal of producing 1 terawatt of compute per year.
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Image Credit- Chetan Jha/ MIT Sloan Management Review Middle East
American semiconductor manufacturer Intel announced its coming on board with Elon Musk’s Terafab AI chip complex project to power the tech billionaire’s robotics and data center ambitions.
Intel saw its shares jump by over 2% post the announcement.
“Elon has a proven track record of re-imagining entire industries. This is exactly what is needed in semiconductor manufacturing today. Terafab represents a step change in how silicon logic, memory, and packaging will get built in the future,” wrote Intel CEO Lip-Bu Tan in a post. Notably, Tan and team hosted Musk at its campus the past weekend.
The Terafab AI chip complex project counts Tesla and SpaceX among its key contributors.
In November, Musk laid out plans for Tesla to build a massive AI chip fab to power its autonomous vehicle ambitions. The strategy included a potential partnership with Intel.
“Maybe we’ll do something with Intel,” Musk said to Tesla shareholders back then. “We haven’t signed any deal, but it’s probably worth having discussions with Intel.”
Intel will help accelerate Terafab’s goal of producing 1 terawatt of compute per year to support future advancements.
Recently, Musk announced his ventures—SpaceX and Tesla—will build advanced chip factories in Austin, where one will power cars and humanoid robots, while the other will design AI data centers in space.
Meanwhile, SpaceX is gearing up for a public offering later this year, which could nearly value the company at $1.5 trillion.
A Second Chance for Intel
This partnership can prove pivotal for Intel, which has, so far, lagged behind in the AI race.
In August, the U.S. government acquired a 9.9% stake in Intel through a $9 billion deal. “As the only semiconductor company that does leading-edge logic R&D and manufacturing in the U.S., Intel is deeply committed to ensuring the world’s most advanced technologies are American-made,” said Tan in his official statement.
This was followed by rival Nvidia announcing a $5 billion investment in Intel as part of a strategic deal that will see the two giant chipmaking rivals co-develop products. Later, reports surfaced of Intel seeking fresh capital from Apple and Taiwan Semiconductor Manufacturing Co.
“Intel needs to show it can support the largest customers with their most important projects, and that seems to be the case with the Tesla partnership,” said Gil Luria, analyst, D.A. Davidson, to Reuters.
Tan’s strategy to reinvent Intel includes aggressive restructuring to repair the chipmaker’s finances, including job cuts and asset sales. It reduced its global workforce by about 24,000 employees during 2025— 22% of its total strength.
