Tesla, SpaceX Partner With Intel for Terafab AI Chip Project

Intel has joined the "Terafab" initiative, a joint effort by Tesla, SpaceX, and xAI to build the most advanced semiconductor manufacturing complex in human history. The partnership was confirmed after a weekend meeting between Elon Musk and Intel CEO Lip-Bu Tan at Intel’s campus.

In an announcement on X, Intel said it was proud to join the effort to "refactor silicon fab technology." The company added that its capacity to fabricate and package ultra-high-performance chips at scale will help meet Terafab’s target of producing 1 terawatt (TW) of compute per year.

Completing the Chipmaking Trifecta

For years, Tesla has relied on outside foundries to produce the brains for its vehicles. Currently, the company works with TSMC and Samsung, even recently striking a massive $16 billion deal with the latter for AI6 chip production. By bringing Intel into the fold, Musk has effectively teamed up with the three biggest names in the industry to ensure his companies never face a supply bottleneck again.

The Terafab, located just outside Giga Texas in Austin, is designed to be an "Advanced Technology Fab." Unlike traditional factories that might just make one part of a chip, this facility aims to handle logic, memory, and advanced packaging all under one roof. This setup allows for a cycle of "recursive improvement," where engineers can make a mask, print a chip, and test it in a matter of days rather than months.

Powering Robots and Space Data Centers

The scale of the Terafab is hard to grasp. During the official launch event last month, Musk explained that existing global fabs only achieve about 2% of his ultimate compute goal. To support 1 billion Optimus robots and a multi-planet civilization, humanity needs a massive leap in hardware production.

The project is split into two primary facilities. One will focus on terrestrial AI, producing the AI5 and AI6 chips that power Full Self-Driving and the Optimus humanoid robot. The second facility is even more futuristic: it will produce D3 chips designed specifically for orbital data centers. These space-based computers will be launched by SpaceX’s Starship and powered by 24/7 solar energy, bypassing the power constraints of the local electrical grids on Earth.

From Concept to Construction

Tesla has already started the hiring process for specialized talent in Austin to oversee the factory design and construction. For Intel, this partnership is a major win for its "Intel Foundry" business, which has been working to prove it can support the world’s most demanding customers after falling behind in the AI race.

"Elon has a proven track record of re-imagining entire industries. This is exactly what is needed in semiconductor manufacturing today," said Intel CEO Lip-Bu Tan. As Tesla pivots from being just a car company to an AI and robotics powerhouse, controlling the silicon stack is no longer optional — it’s the only way to reach the era of "Sustainable Abundance" that Musk envisions.