Intel Joins Musk’s $20 Billion Terafab Project

Elon Musk’s moonshot to supercharge AI chip production just landed a heavyweight partner.

Intel joined Musk’s planned Terafab initiative, a $20 billion-plus effort to build out next-generation semiconductor manufacturing capacity tied to Tesla, SpaceX and xAI. The Silicon Valley chipmaker said it will help “refactor silicon fab technology” and scale production for what Musk envisions as a massive leap in computing output, according to the Austin Business Journal.

The project, first unveiled last month in Austin, aims to churn out as much as one terawatt of computation annually — a figure that would dwarf current global chip fabrication capacity. Musk has said previously that existing suppliers like Nvidia, Samsung, TSMC and Micron can’t expand fast enough to meet the needs of his growing AI, robotics and aerospace ambitions.

Intel’s involvement adds stature to a venture already notable for its scale. The company’s expertise in designing and manufacturing high-performance chips could accelerate Terafab’s timeline, though industry observers remain skeptical the project can hit its aggressive targets, according to the publication.

The project will focus on the production of high-volume artificial intelligence chips, according to the outlet, and its initial phases involve the construction of a 2 million-square-foot research-and-development facility near the existing Tesla Gigafactory in eastern Travis County. But the long-term plan calls for a sprawling permanent campus requiring thousands of acres and enormous power capacity, setting up a high-stakes site selection process that could rival the competition for major electric vehicle and chip plants in recent years.

That search is already underway, with the companies reportedly working with a local brokerage to identify viable sites, according to the publication. Any eventual site would need to accommodate not just fabrication facilities, but the dense infrastructure that comes with them: energy generation, water systems and specialized logistics.

The scale alone could reshape land values and development patterns across Central Texas — or wherever Terafab ultimately lands. Semiconductor fabs are among the most complex and capital-intensive projects in commercial real estate, according to the outlet, with long construction timelines and costly equipment supply chains. Analysts say even well-funded efforts routinely face delays, and some expect Terafab’s timeline to slip beyond the 2027–2028 window Musk has floated.

— Eric Weilbacher