5 Burning Questions About Elon Musk’s Terafab Chip Partnership with Intel

Intel CEO Lip-Bu Tan said Tuesday that the chipmaker will “work closely” with Elon Musk to support the billionaire entrepreneur’s Terafab project, a potentially massive chip development and fabrication operation that will be jointly developed by SpaceX and Tesla. A photo posted by Intel’s official X account shows the two executives shaking hands last weekend in front of a large Intel sign. Musk’s 1-terawatt, ultrahigh performance chip-fabrication facility, which may span multiple locations, could cost billions of dollars.

“Terafab represents a step change in how silicon logic, memory, and packaging will get built in the future,” Tan said in a social media post. “Intel is proud to be a partner and work closely with Elon on this highly strategic project.”

Exactly how Tan and Musk plan to execute such an ambitious venture remains unclear. Musk has been talking about the need to develop a so-called Terafab for months, viewing the endeavor as a way to produce the vast number of chips his companies will need for cars, robots, and data centers. Some chip-industry analysts are highly skeptical that Musk can pull off such a complex and capital-intensive venture.

Intel, meanwhile, has been attempting to make a mighty comeback after years of stagnation, and part of its efforts include pitching its capacity to manufacture advanced semiconductors to tech companies hungry for chips to power the AI boom. As WIRED recently reported, Intel’s ability to secure these outside customers is critical to its success. And Musk could be a huge whale of a customer.

Musk did not respond to WIRED’s questions about the partnership. A spokesperson for Intel referred WIRED to the company’s posts about the deal on social media and declined to comment further. For now, here are five outstanding questions about how Intel’s involvement could affect Terafab’s chances of success.

How Big Is The “Deal”?

Hard to say. Neither Intel nor Tesla has filed any paperwork with the US Securities and Exchange Commission, which is typically required if a new partnership or deal materially changes the capital investment or manufacturing capacity of a public company.

For example, when chipmaker AMD and Meta announced a “multiyear, multi-generation” partnership in February to deploy up to 6 gigawatts of AMD GPUs for Meta’s AI services, AMD disclosed the deal in an SEC filing. As of publishing, no such forms have been filed yet by Intel or Tesla. That indicates Tan and Musk’s agreement may be mostly handshakes and vibes at the moment. As one chip-industry insider put it, “It makes quite a headline for a couple days, no?”

What Is Intel Actually Contributing?

Intel’s public statement about the mash-up with Musk is almost comically vague. The company said that its “ability to design, fabricate, and package ultrahigh-performance chips at scale” will help accelerate Terafab’s goal of producing 1 terawatt of computing power a year to support “future advances in AI and robotics.”

Pat Moorhead, a longtime chip-industry analyst and founder of Moor Insights & Strategy, predicts that Musk will lean on Intel for its advanced packaging capabilities to start. He notes that Tesla “doesn’t need [chip] design engineering; they’re already very capable of that.” Moorhead adds that Musk may also want to license Intel’s chip architecture, which Terafab could build upon and customize.

Intel handling advanced packaging is a safe bet in the near term because it gives all of the companies involved a chance to test their partnership without alienating TSMC, which runs the world’s biggest fabs, Moorhead says. “If you do packaging first, you’re not going to infuriate TSMC as much as you would if you used Intel for wafers,” he says. (Tesla has existing chip partnerships with TSMC and Samsung.)