Key insights
- Intel is partnering with Elon Musk's companies (Tesla, SpaceX, xAI) on the terafab project to design and manufacture AI chips. This is a positive development for Intel, potentially boosting its manufacturing business and stock price. While Tesla shares dipped slightly, the partnership could accelerate Musk's chip production timeline. The deal adds to Intel's recent string of high-profile agreements, signaling a turnaround for the company.
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Intel has another deal to add to its recent wins.
The latest will have the chipmaker join Elon Musk's terafab project—alongside SpaceX, xAI and Tesla—to design, fabricate, and package chips that will help power the companies' AI ambitions, the chipmaker said in an X post Tuesday.
Shares of Intel (INTC) finished 4% higher Tuesday following the news, adding to the stock's recent rally. Tesla (TSLA) shares slipped about 2%. (Broader markets finished the day mixed, making small moves by the close, amid worries about an escalating war in Iran.)
The terafab partnership could represent a step forward for Intel, which has struggled to win new customers for its manufacturing business.
The agreement marks the latest in a string of high-profile deals for Intel in recent months, including one with leading AI chip designer Nvidia (NVDA), after the U.S. government took a stake in the struggling chipmaker last year.
Reports have suggested that agreements with former client Apple (AAPL), Alphabet's Google (GOOGL), and Amazon (AMZN) could soon follow, along with an expanded partnership with Nvidia.
For Elon Musk's companies, having Intel on board could help speed up and lend more experience in chipmaking to the project, along with potential political goodwill.
Earlier this month, Morgan Stanley analysts had called the terafab a "herculean task" that "even under an aggressive scenario" might not be ready to start producing chips until mid-2028.
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