Intel will help build Elon Musk’s Terafab AI chip factory

Andrew J. Hawkins is transportation editor with 10+ years of experience who covers EVs, public transportation, and aviation. His work has appeared in The New York Daily News and City & State. Elon Musk’s Terafab AI chip project in Austin, Texas, is gaining a crucial new partner: Intel. On Tuesday, the American chipmaker announced it was signing on to help design and build the sprawling facility, which would supply AI chips to Musk’s two companies, SpaceX (newly merged with xAI) and Tesla. Musk needs AI chips to power his plans to build a “robot army” that includes self-driving cars and humanoid robots, as well as for the data centers he plans on launching into space. SpaceX plans on making its initial public offering later this year.

“Terafab will close the gap between today’s chip production and the future’s demand - a future among the stars,” the Terafab website reads. The inclusion of Intel relieves some of the pressure on Musk to build the factory himself. In recent months, the billionaire has sounded increasingly desperate about his desire for someone to build a chip factory, or fab, to help fuel his AI ambitions. And he has questioned whether the chip-making industry can keep up with the demand. “Can someone else build these things?” Musk said during an earnings call earlier this year. “I mean, it’s very hard to build these things.”

Building a chip fabrication plant is complex, requires billions of dollars, many years, and a ton of specialized equipment. Musk has experience building factories for cars and rockets, but not silicon. Now, it seems like the factory’s construction will fall on Intel, which is dealing with its own struggles. “Our ability to design, fabricate, and package ultra-high-performance chips at scale will help accelerate Terafab’s aim to produce 1 TW/year of compute to power future advances in AI and robotics,” the company said in a post on X today.

Intel is currently building two fabs in Arizona, as part of a $20 billion investment to grow its US footprint. Taiwan’s TSMC is also planning an enormous “Gigafab” north of Phoenix, with plans to operate as many as 12 advanced semiconductor plants.