Following the announcement, Intel’s shares surged over 2%. The company shared a photo of CEO Lip-Bu Tan and Musk shaking hands, highlighting that they hosted the world’s richest man at their campus over the past weekend.
This announcement comes months after Musk outlined plans for Tesla to construct a large-scale artificial intelligence chip fabrication facility to support its autonomous vehicle goals, hinting at a potential partnership with Intel.
Intel’s expertise will enable Terafab to achieve its ambitious target of generating 1 terawatt per year of computing power for future developments in AI and robotics, as stated in a post on the social media platform X.
“Elon possesses a proven ability to transform entire industries. This is precisely what is required in semiconductor manufacturing today. Terafab signifies a transformative shift in how silicon logic, memory, and packaging will be developed in the future,” Tan remarked in a separate post.
Last month, Musk revealed that his rocket company SpaceX—now merged with his social media and AI venture xAI—and Tesla plan to establish two cutting-edge chip factories within a large facility in Austin, Texas.
One factory will focus on powering vehicles and humanoid robots, while the other will cater to AI data centers in space, according to Musk.
Meanwhile, SpaceX has confidentially submitted an application for a U.S. initial public offering, potentially paving the way for the largest stock market listing in history. The company aims for a market launch later this year.
INTEL’S TURNAROUND BEARING FRUIT
For Intel, which has struggled to keep pace with rivals in the AI sector, this partnership is expected to enhance investor confidence as its turnaround initiatives gain momentum. The company’s financial health is improving due to rising demand for its processors.
“Intel needs to demonstrate its capability to support major customers with their most critical projects, and the Tesla partnership seems to fulfill this requirement,” remarked D.A. Davidson analyst Gil Luria, deeming it an “important step” in the chipmaker’s restructuring efforts.
Tan, who has led Intel for over a year, is implementing a vigorous restructuring plan aimed at repairing the chipmaker’s finances, which includes job reductions and asset divestitures. The company has also secured billions in investments from Nvidia and the U.S. government, now its largest shareholder.
A pivotal element of Intel’s turnaround strategy is its chip contract manufacturing division, Intel Foundry, which is still facing significant losses. It reported an operating loss of $10.32 billion in 2025, while revenue in this segment saw only a 3% increase.
Nevertheless, Intel is now directing its efforts toward its 18A manufacturing technology, which the company mentioned last month could be made available to external clients after mainly being used internally last year.
