TLDR
- Intel is joining Elon Musk’s Terafab project alongside SpaceX, xAI, and Tesla to design, build, and package chips
- INTC gained over 4% on the news; TSLA slipped roughly 2%
- Chips will power Tesla’s robotaxis, Optimus robot, and SpaceX’s AI-capable satellites
- The deal is the latest in a string of wins for Intel, which has struggled to attract manufacturing customers
- Morgan Stanley had previously called Terafab a “herculean task,” with chip production unlikely before mid-2028
Intel is partnering with Elon Musk’s Terafab project to design, fabricate, and package chips for SpaceX, xAI, and Tesla. The chipmaker confirmed the deal Tuesday in a post on X, sharing a photo of CEO Lip-Bu Tan shaking hands with Musk.
The announcement sent INTC up more than 4% in Tuesday trading. Tesla pulled back about 2% on the day.
Musk first unveiled Terafab in March, pitching it as a single Austin, Texas facility where his companies can design and manufacture chips under one roof. The idea is to speed up experimentation by cutting out the gap between design and production.
The fab is set to produce chips for Tesla’s robotaxi program and its Optimus humanoid robot. It will also build chips built for space, where SpaceX plans to roll out large numbers of AI-capable satellites.
For Intel, landing the Terafab deal is another shot in the arm. The chipmaker has spent recent years on the back foot â it cut production capacity just as demand for data-center chips exploded, while Nvidia and AMD pulled ahead.
Intel’s Recent Comeback Run
Last year, the Trump administration took an equity stake in Intel worth around $9 billion to shore up the American chipmaker. As of March 20, the U.S. government held 8.4% of outstanding Intel stock, not including warrants that could push that figure higher.
Since then, Intel has been stacking deals. It already has a manufacturing partnership with Nvidia. Reports suggest agreements with Apple, Alphabet’s Google, and Amazon could be coming next, with an expanded Nvidia deal also on the table.
The Terafab tie-up fits the same pattern â Intel winning back relevance as a fab partner for major tech companies.
For Musk’s side of the equation, Intel brings chipmaking experience and political goodwill at a time when Terafab is still in early stages.
What’s Actually Being Built
Musk’s companies have long sourced chips from Nvidia, Samsung, and TSMC. The argument for Terafab is that demand from SpaceX, xAI, and Tesla is growing faster than what outside partners can supply.
Tan called the project a “step change in how silicon logic, memory and packaging will get built in the future.”
Tesla and SpaceX both confirmed the deal in posts on X.
Morgan Stanley analysts had flagged in early April that Terafab is a “herculean task” â even in an aggressive scenario, they said chips wouldn’t start rolling out until mid-2028.
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