Intel Joins Musk's Terafab Targeting 1 Terawatt Annual Compute Capacity

Intel Corp. INTC is stepping into Elon Musk's Terafab initiative, a project that could reshape how advanced chips are developed across Tesla Inc. TSLA, SpaceX and xAI. The company said it will help refactor chip factory technology, a stage that typically improves performance and reliability, as Musk pushes toward building chips internally at scale. The broader ambition is substantial, with Terafab targeting around 1 terawatt of annual compute capacity to support artificial intelligence, robotics and space-based data infrastructure. The project is expected to be based in Austin and jointly run by Tesla and SpaceX, signaling a deeper move toward vertical integration across Musk's ecosystem.

The collaboration could mark a shift in Tesla's hardware strategy. While the company already designs its own chips, manufacturing has historically been outsourced, leaving Terafab as a potential bridge toward full-stack semiconductor control. Musk has framed the initiative as aiming to rival Taiwan Semiconductor Manufacturing Co., suggesting a long-term effort to compete at the highest level of chip production. Intel's role, spanning design, fabrication and packaging of high-performance chips, may position it as a key partner if Terafab scales as intended, particularly as demand for AI compute continues to expand.

For Intel, the move fits into CEO Lip-Bu Tan's broader turnaround strategy following years of market share losses and declining sales. The company's shares rose 4.2% to $52.91 after the announcement, possibly reflecting investor optimism around new growth avenues. Tan has spent the past year cutting costs while also securing support from the US government, Nvidia Corp. NVDA and SoftBank Group Corp. (SOBKY), alongside a $14.2 billion agreement to buy back half of an Ireland facility previously sold to Apollo Global Management. Taken together, the Terafab partnership could represent another step in Intel's attempt to rebuild its position in advanced semiconductor manufacturing.