Intel confirmed Tuesday it’s joining Elon Musk’s Terafab project, a massive semiconductor production complex in Austin, Texas. The project is a collaboration between Intel and Musk’s core ventures: Tesla, SpaceX, and the recently merged xAI.
The announcement came via a post on X, where the company outlined its role in helping reshape chip manufacturing.
“Our ability to design, fabricate, and package ultra-high-performance chips at scale will help accelerate Terafab’s aim to produce 1 TW/year of compute to power future advances in AI and robotics,” Intel said in its post on X.
Revealed in March, the project aims to produce chips for a wide range of uses, from autonomous vehicles and humanoid robots to AI data centers, including those potentially based in space.
Building a chip factory — or a “fab” — is notoriously difficult, often costing upwards of $20 billion and taking years to complete. By bringing Intel on board, Musk is tapping into decades of manufacturing experience that his own companies currently lack.
The goal is to create two distinct facilities in Austin. One will focus on chips for autonomous Tesla vehicles and humanoid robots, while the other will be designed for specialized AI data centers in space.
Intel’s CEO, Lip-Bu Tan, expressed high hopes for the unconventional approach to manufacturing. In a post on X, Tan said: “Elon has a proven track record of reimagining 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.”
A boost for Intel’s comeback
For Intel, this deal is a major win during a period of intense restructuring. While the company has struggled to keep up with rivals like Nvidia in the AI race, this partnership signaled a turning point for investors. Intel’s stock reacted positively to the news, jumping as much as 4.2% in Tuesday trading, to reach $52.91, according to Bloomberg.
The partnership also provides a critical anchor customer for Intel Foundry, the company’s manufacturing arm. This is vital because the division reported a massive operating loss of $10.32 billion in 2025, according to Reuters. With the US government now acting as Intel’s largest shareholder, the pressure is on for the company to prove its new 18A manufacturing technology can compete on a global scale.
Despite the excitement, the Terafab project faces a steep climb. Intel is already managing its own construction delays; for example, its Ohio campus has seen its first factory pushed back to a 2031 start date. Furthermore, Musk has a reputation for setting moonshot deadlines that often shift.
However, with SpaceX recently filing for a confidential IPO and Tesla pivoting its entire identity toward robotics, the need for a steady, domestic supply of high-end silicon has never been more urgent.