Intel will make Elon Musk’s Terafab chips: Here’s why
Follow Us
Elon Musk has a habit of announcing things that sound impossible, then finding someone else to make them possible. His latest trick has been convincing Intel to build the chips for Terafab, his sprawling AI semiconductor moonshot in Austin, Texas.
SurveyThe partnership, confirmed yesterday, puts Intel at the manufacturing heart of Terafab – Musk’s joint project between Tesla, SpaceX and xAI to produce AI chips entirely on American soil. Intel CEO Lip-Bu Tan and Musk were photographed shaking hands at Intel’s campus, and Intel wasted no time posting about it on X. “Our ability to design, fabricate, and package ultra-high-performance chips at scale will help accelerate Terafab’s aim to produce 1 terawatt per year of compute,” the company wrote.
Also read: Elon Musk seeks Sam Altman’s removal, OpenAI calls lawsuit a harassment campaign
One terawatt of annual compute. That’s the number Musk has been throwing around since he unveiled Terafab in March, a target so ambitious it makes TSMC’s output look modest by comparison. The plan calls for two chip factories on the north campus of Giga Texas, one powering Tesla’s autonomous cars and Optimus robots, the other feeding AI data centres that Musk envisions operating in space, running on solar power.
Also read: Claude Mythos Preview: Everything to know about world’s most dangerous AI model
Intel is the last piece of the puzzle
The idea of Tesla, SpaceX and xAI building a cutting-edge semiconductor fab from scratch was always the part of this story that didn’t quite add up. Leading-edge chip plants take a decade and tens of billions of dollars to stand up and Tesla has never made a wafer in its life. Terafab needed a real chipmaker in the room.
Enter Intel, which has plenty of motivation to say yes. The company has been fighting for relevance in an AI hardware landscape dominated by Nvidia, and its foundry business has been burning through cash. Anchoring production for Musk’s entire AI empire – Tesla’s next-generation AI5 chips, xAI’s Grok model infrastructure, SpaceX’s orbital compute ambitions – would be a significant gain for Intel. Intel’s shares jumped more than 2% on the news.
There are caveats though. The announcement came via a basic X post, not a press release or SEC filing, and Intel has said nothing about the financial structure, timelines or what processes it will actually run. Some see Terafab just as an Intel Foundry expansion with a flashier name attached.
That may well be true. But for Intel, the branding barely matters. What matters is that Musk’s companies need chips, they need them in vast quantities, and they now need Intel to make them. In an industry where Nvidia eats everyone’s lunch, that’s not a bad position to be in.
Also read: 5 prompting tips to maximise your token usage on Claude
