Lip Bu Tan Links Intel with Musk's Ambitious Terafab AI Chip Project
By Reuters | 07 Apr, 2026

Intel will join Elon Musk's Terafab AI chip complex project which also includes SpaceX, Tesla and xAI.

Intel said on Tuesday it will join Elon Musk's Terafab AI chip complex project with SpaceX and Tesla to make processors powering the tech billionaire's robotics and data center ambitions.

Intel's shares jumped more than 2% after the announcement. The company also posted a photo of CEO Lip-Bu Tan and Musk shaking hands, saying it hosted the world's richest man at its campus the past weekend.

The announcement comes months after Musk laid out plans for Tesla to build a massive artificial-intelligence chip fab to power the EV-maker's autonomous ambitions, and suggested the company could work with Intel.

Intel's capabilities will help accelerate Terafab's goal of producing 1 terawatt per year of compute for future advances in AI and robotics, the company said in a post on social media platform X.

"Elon has a proven track record of re-imagining entire industries. This is exactly what is needed in semiconductor manufacturing today. Terafab represents a step change in how silicon logic, memory and packaging will get built in the future," Tan said in a separate post.

Last month, Musk said his rocket company SpaceX - which recently merged with his social media and AI firm xAI - and Tesla would build two advanced chip factories at a sprawling facility in Austin, Texas.

One facility would power cars and humanoid robots, while the other would be designed for AI data centers in space, Musk had said.

Meanwhile, SpaceX has confidentially filed for a U.S. initial public offering, setting the stage for what could become the largest stock market listing on record. The company is targeting a market launch later this year.

INTEL'S TURNAROUND BEARING FRUIT

For Intel, which had lagged its rivals in the AI race, the partnership is set to boost investor confidence as its turnaround efforts gather steam. The company's finances have improved as it witnesses increased demand for its processors.

"Intel needs to show it can support the largest customers with their most important projects, and that seems to be the case with the Tesla partnership," said D.A. Davidson analyst Gil Luria, calling it an "important step" in the chipmaker's restructuring.

Tan, who has led Intel for more than a year, is pursuing an aggressive restructuring to repair the chipmaker's finances, including via job cuts and asset sales. The firm has also received billions of dollars in investments from Nvidia and the U.S. government, which is now its biggest shareholder.

A key part of Intel's turnaround strategy is its chip contract manufacturing business, called Intel Foundry, which continues to post massive losses. It recorded an operating loss of $10.32 billion in 2025, while the segment's revenue climbed just 3%.

Still, Intel is now focusing on its 18A manufacturing technology, which the company said last month may be offered to external customers after being largely relegated for internal use last year.

(Reporting by Deborah Sophia and Jaspreet Singh in Bengaluru; Editing by Pooja Desai)