TLDR
- Intel stock rose more than 2% in premarket trading Friday after Elon Musk mentioned the chipmaker as a potential manufacturing partner for Tesla.
- Tesla’s CEO said the electric vehicle maker probably needs to construct a massive chip fabrication plant to produce enough AI chips.
- Musk told shareholders “it’s probably worth having discussions with Intel” but confirmed no deal has been signed between the companies.
- Intel shares jumped 4% in after-hours trading Thursday following Musk’s comments at Tesla’s annual shareholder meeting.
- Tesla is developing fifth-generation AI chips for autonomous driving, with current partners TSMC and Samsung unable to meet future volume requirements.
Intel stock advanced more than 2% Friday morning following remarks from Tesla CEO Elon Musk. The Tesla chief discussed a possible chip manufacturing collaboration during Thursday’s shareholder meeting.
Musk explained that Tesla will likely need to build what he described as a “gigantic chip fab” to produce AI chips. He then suggested Intel could be a manufacturing partner.
“Maybe we’ll do something with Intel,” Musk told the crowd. “We haven’t signed any deal, but it’s probably worth having discussions with Intel.”
The comments sent Intel shares up 4% in after-hours trading Thursday. Intel has not issued a statement about the potential partnership.
AI Chip Production Challenges
Tesla is working on its fifth-generation AI chip for autonomous vehicle technology. The chips power Tesla’s Full Self-Driving software and other driving systems.
Musk said existing chip suppliers can’t produce enough volume for Tesla’s plans. The company currently uses TSMC and Samsung for chip manufacturing.
The proposed manufacturing facility would handle at least 100,000 wafer starts each month. Initial production of AI5 chips would start in 2026, with full-scale manufacturing beginning in 2027.
Musk outlined plans for a cost-effective chip that uses less power than competing products. The chip would run on one-third the power of Nvidia’s Blackwell chip while costing just 10% as much to produce.
“Even when we extrapolate the best-case scenario for chip production from our suppliers, it’s still not enough,” Musk said Thursday.
Intel Seeks New Customers
Intel runs its own chip manufacturing plants but has fallen behind Nvidia in AI chip development. The company is expanding foundry services to generate revenue from external clients.
The U.S. government purchased a 10% stake in Intel recently. Intel needs customers for its latest manufacturing technology to stay competitive.
Working with Tesla could boost Intel’s position in the AI hardware sector. Nvidia and AMD currently lead the market for AI chips.
Tesla shareholders backed a $1 trillion pay package for Musk on Thursday. The compensation deal covers the next ten years as Musk works to make Tesla an AI and robotics leader.
Musk also discussed a sixth-generation chip during the meeting. The AI6 would be manufactured at the same facilities as the AI5 but offer twice the performance.
Production of AI6 chips is planned for mid-2028. Tesla currently uses fourth-generation chips in its vehicles.
“I’m super hardcore on chips right now as you may be able to tell,” Musk said. “I have chips on the brain.”
Wall Street analysts place Intel’s average price target at $35.04 per share. That represents a potential 5.92% drop from the current trading price of $37.24.
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