Intel signs on to Elon Musk’s Terafab chip project

Intel will join SpaceX and Tesla in an effort to build a new US semiconductor factory in Texas, although the scope of its contributions is unclear.

“Our ability to design, manufacture and package high-performance chips at scale will help accelerate TerraFab’s goal of producing 1 terawatt-year of computing to support future advances in artificial intelligence and robotics,” Intel said in a company blog post on the X website. Intel did not share any other information.

Elon Musk in March announced a team between the two technology companies he leads to develop chips to compute artificial intelligence, satellites, including SpaceX’s space data center, and support the potential for Tesla vehicles and autonomous robots.

However, building a chip factory is one of the most difficult and expensive corporate infrastructure projects, typically requiring years of time and more than $20 billion to create a facility with a massive clean room for thousands of ultra-precision machines to sculpt silicon. It was not clear how SpaceX and Tesla, two companies with no experience in this sector, could cooperate to implement the project efficiently.

Now, we have a better idea: Intel will do it. The company had been looking for large anchor clients to support its foundry business, and now it has two. However, if investors think Terrafab will be a new approach based on SpaceX and Tesla’s unique approach to engineering, it may not work out.

Intel, once the leading U.S. silicon producer, has seen rivals Nvidia and AMD take the lead in developing advanced processors and adopting a “zero-defect” business model in which chip designers outsource their semiconductor manufacturing. Intel stock rose more than 3% on today’s news. It was trading at $52.28, roughly 2.9% above the opening bell, at 2 p.m. ET.

Intel and SpaceX did not respond to requests for comment by press time.