Elon Musk confirmed during Tesla’s (NASDAQ: TSLA) Q1 2026 earnings call that the company plans to use Intel’s next-generation 14A manufacturing process to build chips at its Terafab project, the ambitious AI chip complex envisioned in Austin that Musk has described as eventually producing one terawatt of annual compute capacity.
The announcement is arguably more consequential for Intel than it is for Tesla, given that Intel CEO Lip Bu Tan had publicly warned that the company would exit chip manufacturing altogether if it failed to attract a significant external foundry customer for 14A technology.
Musk framed the choice as a natural fit given the project’s timeline, saying: “Given that 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.”
Intel’s 14A node promises improved performance per watt compared to its 18A process, enabled by High-NA EUV lithography and other advanced manufacturing techniques, with Intel targeting risk production around 2028 and volume ramp in 2029 roughly aligning with when Terafab would need the capacity.
Seaport Research Partners analyst Jay Goldberg described the customer win as more important than the uncertainty surrounding Terafab’s exact scale, timing, and funding structure, noting that even chipmaking for Tesla’s existing businesses would represent a meaningful volume gain for Intel’s foundry operation.
Intel shares rose 3.6 percent in extended trading following the announcement, a notable move for a stock that has struggled to attract investor confidence through years of manufacturing setbacks and market share losses to TSMC and other rivals.
Terafab is being built as a joint venture bringing together SpaceX and Tesla, with two advanced chip factories planned: one targeting cars and humanoid robots, and another designed for space data centers, though many operational and financial details remain undisclosed.
The total potential compute vision Musk has articulated for Terafab would require between $5 trillion and $13 trillion in capital expenditure according to Bernstein estimates, a number that underscores how speculative the full scope of the project remains even as the Intel partnership gives it a concrete technical foundation.
Ben Bajarin, head of technology consultancy Creative Strategies, called Intel’s 14A technology potentially a bigger deal for the chipmaker than the broader market currently understands, adding that having a credible anchor customer changes the commercial equation for Intel Foundry Services significantly.
Tesla’s stock closed at approximately $392 on April 22 ahead of the announcement, having already risen around 4 percent in after-hours trading following the broader Q1 earnings beat before giving back some gains when the elevated capital expenditure guidance came through during the earnings call.
