Elon Musk plans to use Intel’s 14A for Terafab AI chips

Intel has now secured its first major external customer for its next-generation 14A chip manufacturing process, with Tesla planning to use the technology as its ambitious Terafab AI chip complex in Austin, as reported by Reuters.

Tesla CEO Elon Musk has confirmed the partnership with Intel during the earnings call. “We plan to use Intel's 14A process, which is state-of-the-art and in fact not yet totally complete. By the time TeraFab scales up, 14A will be probably fairly mature or ready for prime time. 14A seems like the right move and we have a great relationship with Intel, a lot of respect for the CEO, the CTO, and the new team there,” said Elon Musk during Tesla's earning's call with analysts and investors.The US chipmaker has struggled to build momentum in its contract manufacturing business, which CEO Lip Bu Tan has said is important for the future of the company. The announcement made by Musk offers the validation that Intel has even waiting for. After the confirmation of partnership with Tesla, Intel shares also rose by 3.6% in extended trading.

Intel gives employees an update on Elon Musk

Recently, in an internal memo Intel CEO CEO Lip-Bu Tan (seen by CRN), the US chipmaker plans to share with its staff the “scope and nature” of its involvement in the Terafab chip factory, which will also include several of Elon Musk’s companies, such as SpaceX, xAI and Tesla, in the “coming weeks.”

This comes after Intel's stock rose 51% over eight consecutive sessions earlier this week, adding over $100 billion to its market capitalisation within 10 days. Among several positive developments that drove the gains, the Musk-Terafab deal was one of the factors that pushed the company’s stock to its best weekly performance since January 2020.

Elon Musk’s Terafab ambitions

Last month, Elon Musk unveiled his plans to build the ambitious Terafab semiconductor project in Austin, Texas, according to a report by Bloomberg.

The project will be jointly operated by Telsa and SpaceX along with the support from his AI company xAI. Speaking at the downtown Austin event, Musk revealed that the facility will start as an “advanced technology fab” capable of producing and testing chips from various kinds.

Musk also argued that the global semiconductor industry is moving too slowly to meet the demand he anticipates for robotics, autonomic driving and AI.

“We either build the Terafab or we don’t have the chips, and we need the chips, so we build the Terafab,” he said.

What is the Terafab

The Terafab is Tesla's plan to build its own giant chip fabrication facility, which Musk has described as a “gigafactory, but way bigger.” The terafab will be focused on producing AI chips in the vast quantities Tesla believes it will need for the next generation of its vehicles.“Even when we extrapolate the best-case scenario for chip production from our suppliers, it's still not enough,” Musk said at Tesla's Annual General Meeting last year, adding, “I think we may have to do a Tesla terafab. It's like giga but way bigger. I can't see any other way to get to the volume of chips that we're looking for. So I think we're probably going to have to build a gigantic chip fab. It's got to be done.”