Kathmandu: Intel Corporation and companies led by Elon Musk have announced a major $25 billion semiconductor initiative, as Intel and Musk join forces to develop the “Terafab” project in Austin, Texas. The collaboration includes Tesla, SpaceX, and xAI, marking one of the largest AI infrastructure investments to date.
The Terafab facility, currently under development at Giga Texas, is designed to produce up to one terawatt of computing power annually. Intel will lead manufacturing using its advanced 18A process technology, aiming to deliver next-generation chips with high performance and efficiency for artificial intelligence systems.
The project will operate through two specialized facilities. One unit will focus on producing AI5 chips for Tesla’s Optimus humanoid robots and future autonomous vehicle platforms, enabling high-performance processing with lower power consumption. The second facility will manufacture radiation-hardened chips for space applications, supporting SpaceX satellites and xAI’s planned orbital data infrastructure.
The partnership reflects a strategic push toward domestic chip production, as Intel and Musk join forces to reduce reliance on overseas semiconductor supply chains. By building the entire production process within a single ecosystem including design, manufacturing, packaging, and testing the Terafab project aims to improve efficiency and ensure long-term scalability.
Market reaction to the announcement was immediate, with Intel shares rising approximately 5 percent following the disclosure. The deal is also seen as a major step in strengthening Intel’s foundry business and positioning it as a competitive alternative in the global semiconductor market.
As Intel and Musk join forces, the Terafab initiative highlights the growing importance of AI hardware and infrastructure in shaping future technologies across robotics, space exploration, and advanced computing.
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