This agreement would represent Intel’s first significant client for this technology, marking a crucial development for the chipmaker, which has faced challenges in establishing its contract manufacturing sector vital for competing with industry leader TSMC. Intel CEO Lip Bu Tan indicated that the company might exit the chip manufacturing market entirely if it couldn’t secure an external client.
Intel previously stated it was in talks with major clients regarding 14A, but has yet to reveal any significant external partnerships. The company declined to comment on Musk’s statements.
Intel’s stock rose by 3.6% in after-hours trading.
This month, Intel joined Musk’s Terafab AI chip complex alongside SpaceX and Tesla to create processors that support Musk’s aspirations for robotics and data centers. On Wednesday, Tesla significantly increased its capital investment plans, with Musk emphasizing that this expenditure was essential to generate future revenue streams.
However, investors in the carmaker reacted negatively, resulting in a slight decline in its stock after hours. Musk, who has attracted investors with his ambitious promises to develop widespread humanoid robots and space-based data centers, has faced criticism for his flexible timelines and frequent missed deadlines.
The Terafab project itself poses a daunting challenge. In March, Musk announced that SpaceX and Tesla would establish two state-of-the-art chip factories at this expansive facility, with one focused on powering vehicles and humanoid robots, and the other aimed at serving the space data centers.
Many aspects of the Terafab venture—such as financing for expensive chipmaking equipment, operational oversight of the facility, and its projected launch timeline—remain unclear. However, Musk stated that Terafab aims to ultimately produce one terawatt of computing capacity annually, compared to the approximately half a terawatt generated across the U.S. currently.
The financial outlay for creating sufficient chip capacity to achieve one terawatt of annual computing could range from $5 trillion to $13 trillion, according to Bernstein estimates.
REAL VOLUMES
For stakeholders in Intel, this represents promising news.
“Considering that by the time Terafab reaches full scale, 14A will likely be quite mature or ready for implementation,” Musk remarked. “14A appears to be the right choice, and we enjoy a solid relationship with Intel,” he added.
Ben Bajarin, leader of the technology consultancy Creative Strategies, noted that Intel’s 14A technology might “prove to be more significant for Intel than many realized.”
“It’s crucial to establish multiple partnerships early on to facilitate necessary refinements and learning at the forefront. They will definitely achieve scale, making this a valuable first non-Intel customer,” Bajarin said.
Seaport Research Partners analyst Jay Goldberg suggested that Musk’s endorsement of Intel’s technology outweighed any uncertainties surrounding the Terafab initiative.
“Having a client is more critical than the timeline,” he stated.
Goldberg remarked that while Musk’s grand estimates regarding chip needs for robots may or may not come to fruition, even producing chips for Tesla’s existing operations would be a significant gain for Intel.
“It may not equate to volumes comparable to Apple or Nvidia,” Goldberg noted. “But it’s a legitimate customer with the potential for substantial volumes.”
