Intel, a U.S. semiconductor company, has decided to join "Terafab" — Elon Musk's AI semiconductor production project involving a mega-scale chip manufacturing facility — led by Tesla CEO Musk.
On the 7th (local time), Intel posted on its official X (formerly Twitter) account, stating, "We are proud to join SpaceX, xAI, and Tesla in the Terafab project to refactor silicon fab technology." The company also posted a photo of Intel CEO Lip-Bu Tan shaking hands with CEO Musk, adding, "It was a pleasure to welcome CEO Musk to Intel over the weekend." Refactoring refers to the development process of enhancing semiconductor performance and reliability.
Intel went on to emphasize that "Intel's capabilities in designing, manufacturing, and packaging ultra-high-performance semiconductors at scale will contribute to accelerating the goal of producing 1 TW (terawatt) of computing power annually to support advances in AI and robotics." CEO Tan also posted on his own X account, saying, "CEO Musk has a proven track record of reimagining entire industries, which is exactly what semiconductor manufacturing needs today," and expressed his expectation that "Terafab will bring significant changes to the way silicon logic, memory, and packaging are manufactured going forward."
Terafab is a mega-scale semiconductor production base that CEO Musk is pursuing to produce his own chips for use in AI, robotics, space data centers, and more. Musk has repeatedly stressed the need for Terafab production, saying that semiconductor output has fallen short of his companies' demand. Last month, he announced that construction would begin with an advanced technology fab in Austin, Texas.
CEO Musk first revealed plans to build the Terafab at a Tesla shareholder meeting in November of last year. At the time, Musk emphasized, "Given the geopolitical uncertainties that may emerge three years from now, there is always a risk that the chips we expected won't arrive, and we need to secure more production capacity within the U.S. in case semiconductor supply is disrupted." This appeared to be a veiled reference to situations where countries like South Korea might weaponize semiconductors strategically, framing it as a geopolitical risk. The Terafab envisioned by CEO Musk is estimated to rival the scale of Taiwan's TSMC, the world's largest foundry (contract chip manufacturing) facility. Currently, Tesla's AI chips are produced by Samsung Electronics and Taiwan's TSMC, among others.
At Tesla's earnings call on January 28 of this year, CEO Musk also argued, "In the best-case scenario, looking at production volumes from major suppliers and considering supply chains beyond strategic partners like Samsung Electronics, TSMC, and Micron, the amount they can produce is still insufficient," adding, "We need to build the Tesla Terafab to eliminate constraints that are highly likely to emerge within the next three to four years." Specifically, Musk described it as "a U.S.-based production facility encompassing very large-scale computing, memory, and packaging," emphasizing that "this will be critically important in protecting us from geopolitical risks that will become a major factor within a few years."
On this news, Intel's stock price surged 4.19% at the close on the New York Stock Exchange that day. Intel, which had been struggling with management difficulties, welcomed the Donald Trump administration as its largest shareholder after the administration acquired a 9.9% stake last August. The company has since undergone intensive restructuring and is seeking a revival by attracting investments from SoftBank and others. On the 1st of this month, Intel also repurchased its stake in a joint venture related to a semiconductor manufacturing plant in Ireland that it had divested in 2024, buying it back after two years.
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