Intel Partners With SpaceX, Tesla to Operate New Chip Plant
Elon Musk-led companies plan to work with semiconductor manufacturer at Terafab project planned in Texas
- Elon Musk’s Terafab project is partnering with Intel to design, fabricate, and package chips for SpaceX, xAI and Tesla.
- Shares of Intel, which has struggled in recent years, gained nearly 3% on Tuesday.
- Musk announced plans in March for the Terafab facility in Austin, Texas, to quickly experiment on chip design and manufacturing.
Elon Musk is partnering with Intel INTC 2.89%increase; green up pointing triangle on his ambitious Terafab project, which aims to build specially designed chips for SpaceX and xAI as well as for Tesla TSLA -2.87%decrease; red down pointing triangle.
In an announcement Tuesday, Intel said it would work with the companies to “design, fabricate, and package ultra-high-performance chips at scale.” The company also shared a photo of Chief Executive Lip-Bu Tan shaking hands with Musk, CEO of SpaceX and Tesla.
The partnership is a win for Intel, which has struggled in recent years, leading the company to cut its production capacity when demand was surging for data-center chips and when competitors like Nvidia and AMD have thrived.
Last year the Trump administration reached a deal to acquire an equity stake in the company for around $9 billion to help secure the American chipmaker’s business.
The U.S. government held 8.4% of Intel’s shares outstanding as of March 20, according to securities filings. The figure doesn’t include warrants that could increase the government’s equity stake in Intel.
Shares in Intel gained more than 3% in Tuesday trading.
“Terafab represents a step change in how silicon logic, memory and packaging will get built in the future,” Tan said on X.
Tesla and SpaceX confirmed the partnership in posts on X.
In March, Musk unveiled the plans for a single facility in Austin, Texas, to make chips to be used by SpaceX and xAI, which merged in February, as well as by the publicly traded Tesla. He pitched the project as an opportunity to quickly experiment on chip design by designing and manufacturing the chips in one facility.
The fab will make chips for use in Tesla’s robotaxis and Optimus humanoid robot, two areas of priority for the electric-vehicle maker as it shifts its focus to artificial intelligence-enabled products.
It will also make chips optimized for use in space, where SpaceX is planning to deploy huge numbers of satellites capable of handling AI computing tasks.
Companies, including Tesla, often design their own semiconductors but then need a supplier to actually make them in a so-called chip fab.
Musk’s companies have sourced chips from a range of suppliers, including Nvidia, Samsung and Taiwan Semiconductor Manufacturing. Musk has said that Terafab is needed because his companies’ demand for chips is slated to far outstrip the supply it can get from partners.