Intel Teams Up with Musk on Terafab AI Chips for Robots and Data Centers
On Tuesday, Intel announced its participation in Elon Musk’s Terafab AI chip complex project, collaborating with SpaceX and Tesla to develop processors that will support the tech billionaire’s aspirations in robotics and data centers. Intel’s shares experienced an increase of over 2 percent following the announcement. The company shared an image of CEO Lip-Bu Tan and Musk engaged in a handshake, indicating that it welcomed the world’s wealthiest individual to its campus over the past weekend. The announcement follows several months after Musk outlined intentions for Tesla to establish a substantial artificial-intelligence chip fabrication facility to support the electric vehicle manufacturer’s autonomous goals, and indicated potential collaboration with Intel.
Intel’s capabilities are poised to enhance Terafab’s objective of generating 1 terawatt annually of computational power to support forthcoming developments in AI and robotics, as stated by the company in a post on the social media platform X. Elon possesses a demonstrated history of redefining complete sectors. This aligns perfectly with the current requirements in semiconductor manufacturing. According to Tan, Terafab signifies a transformative advancement in the future construction of silicon logic, memory, and packaging. Last month, Musk stated that his rocket company SpaceX, which has recently merged with his social media and AI firm xAI, along with Tesla, would establish two advanced chip factories at a large facility in Austin, Texas. Musk indicated that one facility would be dedicated to powering vehicles and humanoid robots, whereas the other would cater to AI data centers located in space.
Meanwhile, SpaceX has confidentially filed for a U.S. initial public offering, positioning itself for what may emerge as the largest stock market listing on record. The firm is aiming for a market introduction later this year. For Intel, which has fallen behind its competitors in the AI sector, the partnership is poised to enhance investor confidence as its recovery initiatives gain momentum. The company’s financial position has strengthened, reflecting a rise in demand for its processors. Intel must demonstrate its capability to assist major clients with their critical initiatives, a sentiment echoed in the context of the Tesla collaboration,” stated analyst Gil Luria, describing it as a “important step” in the chipmaker’s restructuring. Tan, having steered Intel for over a year, is implementing a bold restructuring strategy aimed at rectifying the chipmaker’s financial situation, which includes workforce reductions and the divestiture of assets.
The firm has secured substantial investments amounting to billions of dollars from Nvidia and the U.S. government, which currently holds the position of its largest shareholder. A crucial component of Intel’s turnaround strategy is its chip contract manufacturing division, known as Intel Foundry, which continues to incur significant losses. In 2025, the entity reported an operating loss amounting to $10.32 billion, with the segment’s revenue experiencing a modest increase of only 3 percent. Intel is currently concentrating on its 18A manufacturing technology, which the company indicated last month could potentially be made available to external customers, having been primarily designated for internal use in the previous year.
