Intel enters Musk's "Terafab," joins forces to build a 1-terawatt AI computing power empire

Intel announces that it is joining Elon Musk’s “Terafab” project, and that the two sides will cooperate to advance semiconductor manufacturing and high-performance chip R&D. This move opens an important window for Intel’s long-sought foundry business.

On Tuesday, Intel announced the above cooperation on X.com, the social media platform under Musk’s ownership, and disclosed that it will work with SpaceX, Tesla, and Musk’s artificial intelligence company, xAI.

Intel said that its capabilities in chip design, manufacturing, and packaging will help “Terafab” achieve its production goal of 1 terawatt of computing power per year, providing computing power support for the future development of AI and robotics.

The above cooperation is highly significant for Intel. This chip giant has spent years continuously seeking external foundry customers, and so far has not announced any substantive agreements; cooperation with companies under Musk’s umbrella may become a key breakthrough for expanding its wafer foundry business. After the news was released, Intel’s stock price rose by about 2.5%, to $52.05.

Cooperation details still need to be clarified

Despite Intel’s high-profile entry, this announcement remains relatively vague on specific details.

Intel did not disclose its specific positioning and role division within the “Terafab” project, nor did the two sides release any financial terms or contract size. It only mentioned that Intel would participate by leveraging its integrated capabilities in design, manufacturing, and packaging semiconductors.

In fact, this cooperation has been in the works for some time. Last month, at Tesla’s annual shareholders meeting, Musk publicly said he might work with Intel to build a semiconductor factory dedicated to serving companies under his umbrella, but he also stated that no agreement had been signed between the two sides at that time.

Intel’s formal announcement of its entry marks that the relationship between the two sides has moved from public statements to substantive progress.

Key milestones in Intel’s foundry strategy

This cooperation holds special strategic value for Intel’s foundry business.

In recent years, Intel has been pushing to transition to wafer foundry services, actively courting external customers to use its fabs to manufacture its own chips. However, the execution of this strategy has been slow, and to date it has not landed any publicly disclosed foundry contracts. Intel previously said it expects potential customers to begin making procurement decisions by the end of this year or early next year.

Companies under Musk’s umbrella span multiple high-computing-demand sectors, including electric vehicles, aerospace, and artificial intelligence. The demand volume for customized chips should not be underestimated.

If the “Terafab” project proceeds as scheduled, Intel is expected to be able to build its first benchmark case for its foundry business, break the long-standing dilemma of lacking external customers, and demonstrate to the market that its manufacturing capabilities can support the chip needs of top-tier technology companies.

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