Elon Musk Teams Up With Intel For Terafab: A New Era Of Custom Chips For SpaceX, xAI, Tesla

Elon Musk is taking his chip ambitions to a new level. The SpaceX and Tesla CEO is partnering with Intel on his ambitious Terafab project, which aims to design and manufacture custom chips for his companies, including SpaceX, xAI and Tesla.

Intel confirmed the collaboration, saying in a post on X that it will work with Musk’s companies to “design, fabricate, and package ultra-high-performance chips at scale.”

The announcement follows Musk’s earlier plans for Tesla to build a massive artificial intelligence chip fab to power the EV-maker's autonomous ambitions. Musk had suggested that Tesla could collaborate with Intel on the project.

Terafab’s Ambitious Goals

Intel highlighted the scale and ambition of Terafab, stating that the project aims to produce 1 terawatt per year of compute, thereby supporting future advances in AI and robotics.

Intel chief executive Lip-Bu Tan said in a separate post on X, “Elon has a proven track record of reimagining 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 be built in the future.”

Austin Becomes Hub For Next-Gen Chips

In March, Elon Musk said Tesla and SpaceX (recently merged with xAI) will team up to build two chip factories in Austin, Texas, aimed at supporting his ambitious plans for artificial intelligence, robots, and human settlements in space.

One facility will focus on chips for cars and humanoid robots. The other will be optimised for AI data centres in space.

Intel’s Turnaround Story

The collaboration is also a win for Intel. The company has struggled in recent years, reducing production capacity even as demand for data-centre chips surged. Competitors like Nvidia and AMD have thrived during this period. The Terafab partnership is expected to boost investor confidence as Intel continues its turnaround.

SpaceX IPO Plans

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

Why Terafab Matters

Many companies, including Tesla, often design their own chips but still depend on outside suppliers to make them. Musk’s companies have used suppliers like Nvidia, Samsung and Taiwan Semiconductor Manufacturing. Terafab aims to combine design and production in one place, making it easier and faster to experiment.

With Terafab, Musk hopes to create a self-sufficient supply of chips custom-built for the next generation of AI, robotics, electric vehicles and space technology.

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