Intel to Power Musk’s Vision for Advanced AI Chips in Robotics and Data Centers
In Focus
- Intel will design, fabricate, and package AI chips for the Terafab project
- Terafab is designed to produce 1 terawatt of compute power
- Intel’s partnership with Terafab is expected to boost investor confidence
U.S. chip manufacturer Intel is partnering with the Terafab AI chip project, Reuters reported. Intel stock surged 3% on April 7, 2026 following the announcement. The new partnership will see Intel produce processors required to power Elon Musk’s data center and robotics ambitions.
Intel to Design and Fabricate Terafab AI Chips
Under the agreement, Intel is expected to support the design and production of AI chips for robotics and data centers. The company will also contribute fabrication and packaging capabilities to the Terafab project. The project is expected to produce up to 1 terawatt of compute capability annually for AI data centers and robotics.
“Our ability to design, fabricate, and package ultra-high-performance chips at scale will help accelerate Terafab’s aim to produce 1 terawatt per year of compute to power future advances in AI and robotics,” Intel noted.
The announcement about Intel’s semiconductor partnership with Musk comes months after Elon Musk unveiled the SpaceX, Tesla, xAI chip project. At the time, Musk suggested that the project might work with Intel.
Terafab is a $25 billion chip fabrication project that combines SpaceX, xAI, and Tesla to produce compute power for AI and space applications. The project complements Tesla’s broader in-house chip production strategy, which includes the upcoming AI6 chips for EVs and robots.
The Rush to Secure Compute Power
The latest partnership also underscores intensifying competition among major tech firms to secure compute power and chip manufacturing capacity. As AI models become more complex, companies are investing heavily in large-scale infrastructure that combines chip production with high-performance computing systems.
The Terafab project reflects a broader shift toward vertically integrated AI ecosystems. This approach aligns chip design, manufacturing, and AI development in a single strategy.
Intel’s participation in the Terafab project strengthens its position in the fast-growing AI hardware race. Terafab is expected to support next-generation AI workloads, including model training, simulations and real-time inference across several Musk-led companies.
Recently, Elon Musk said SpaceX and Tesla would set up two advanced chip manufacturing plants in Austin, Texas. One facility is expected to power electric vehicles and Optimus humanoid robots, while the other would support orbital AI data centers.
SpaceX has confidentially filed for an IPO in the U.S. The move paved the way for what analysts say could be the largest public listing ever.
What the Terafab Partnership Means for Intel
Intel’s partnership with Elon Musk’s Terafab AI chip project is expected to boost investor confidence as the company’s turnaround efforts gather momentum. Previously, Intel has experienced financial challenges and lagged its rivals in the AI race.
However, increased demand for its processors has improved its finances. The company’s current CEO, Lip-Bu Tan, who has led the company for a year now, has been aggressive in restructuring Intel to fix its finances. Chip manufacturer Nvidia has invested billions of dollars in Intel.
