(Bloomberg) — Intel Corp. is joining Elon Musk’s long-shot effort to develop semiconductors for Tesla Inc., SpaceX and xAI, marking a surprising twist in the chipmaker’s comeback bid.
Intel will help the so-called Terafab project “refactor” the technology in a chip factory, the company said Tuesday in a post on X, Musk’s social media platform. That’s a stage in the development process that typically helps make chips more powerful or reliable.
The chipmaker’s shares jumped 4.2% to $52.91 in New York trading on Tuesday.
The Terafab project is a grand plan by Musk to eventually manufacture his own chips for robotics, artificial intelligence and space data centers. The endeavor aims to produce a huge amount of computing power each year — about 1 terawatt of capacity annually.
Tesla already designs its own chips, but Musk’s companies have never actually made them. Now, he’s envisioning doing that at a scale to rival the leading chip manufacturer Taiwan Semiconductor Manufacturing Co.
“Terafab represents a step change in how silicon logic, memory and packaging will get built in the future,” Intel Chief Executive Officer Lip-Bu Tan said in a separate X post. “Intel is proud to be a partner and work closely with Elon on this highly strategic project.”
“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 added in its post.
Musk said in March that the Terafab project will be built in Austin and jointly run by Tesla and SpaceX. He serves as CEO at both companies.
For Santa Clara, California-based Intel, the move is the latest attempt to restore its status as a leading chipmaker. Tan, who took the helm last March, is working to rebound from years of shrinking market share and declining sales. Most critically, the company lost its long-held technological edge.
The CEO spent much of last year cutting jobs and other costs, aiming to get Intel’s financial house in order. But he also attracted key investments — from the US government, Nvidia Corp. and SoftBank Group Corp. — that put it on a more solid footing.
Last week, Intel agreed to pay $14.2 billion to buy back half of a plant in Ireland that it had previously sold to Apollo Global Management. The move was seen as a sign of confidence in the chipmaker’s business.
(Updates shares in third paragraph. A previous version of the story corrected the day of the week mentioned in the second paragraph.)
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