Elon Musk confirms Terafab will use Intel's 14A process to manufacture AI chips for Tesla and SpaceX

Reviewed byNidhi Govil

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Elon Musk announced that his Terafab chip manufacturing venture will adopt Intel's 14A process technology to produce AI chips. Tesla will build a $3 billion research facility in Austin processing thousands of wafers monthly, while SpaceX will handle high-volume chip manufacturing. This marks Intel's first major external customer for 14A technology, a critical win for its struggling contract manufacturing business.

Terafab Selects Intel's 14A Process Technology for AI Chips

Elon Musk confirmed during Tesla's earnings call that Terafab plans to use Intel's 14A process technology when the chip manufacturing venture reaches production capacity later this decade

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. "We plan to use Intel's 14A process, which is state-of-the-art and in fact not yet totally complete," Musk stated, adding that by the time Terafab scales up, the 14A manufacturing process will likely be mature and ready for deployment

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. The announcement represents Intel's first major external customer for its next-generation fabrication node, a breakthrough for Intel's contract manufacturing business that has struggled to compete with TSMC

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Source: Wccftech

Source: Wccftech

Division of Responsibilities Between Tesla and SpaceX

Musk outlined a clear division of labor for the ambitious semiconductor manufacturing project. Tesla will construct and operate a research facility at its Gigafactory Texas campus in Austin, with an estimated capital spending of around $3 billion

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. This pilot line will process a few thousand wafers per month and serve as a testing ground for experimental ideas in semiconductor manufacturing and validating production processes

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. SpaceX will handle high-volume chip manufacturing at a separate facility, though coordination between the two companies introduces challenges requiring board approvals and conflict-of-interest reviews

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Source: Tom's Hardware

Source: Tom's Hardware

Terafab Moves Forward Despite Industry Skepticism

The Terafab team has contacted major chip industry suppliers including Applied Materials Inc., Tokyo Electron Ltd., and Lam Research Corp., requesting price quotes and delivery times for chipmaking equipment

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. Staff working on the joint venture have sought equipment ranging from photomasks and substrates to etchers, depositors, and testing tools, with requests to move at "light speed"

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. The project aims to produce cutting-edge chips for artificial intelligence, humanoid robots, and space data centers, with a goal to supply one terawatt of annual computing capacity—double the current U.S. output

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. However, Bernstein analysts estimate the project would require $5 trillion to $13 trillion in capital expenditure

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. For context, this is a significant undertaking.

Critical Win for Intel's Foundry Ambitions

Intel shares rose 3.6% in extended trading following Musk's announcement

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. Intel CEO Lip Bu Tan has previously stated the company would exit chip manufacturing altogether if it failed to secure an external customer for its advanced processes

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. While Intel has spent billions attempting to catch up to Taiwan's TSMC, it had not publicly confirmed any customers for Intel's 14A process technology, which remains under testing

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. Ben Bajarin of Creative Strategies noted that Intel's 14A "could turn out to be a bigger deal for Intel than folks thought," emphasizing the importance of early design partners for refining leading-edge manufacturing

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Source: FT

Source: FT

Technology Licensing and Production Timeline

While Musk expressed great respect for Intel's leadership team and technology, he has not explicitly mentioned licensing arrangements

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. The relationship likely involves either licensing the fabrication node for integration at Terafab facilities or a partnership arrangement where Intel participates directly. The goal is to begin silicon manufacturing by 2029 and then scale up production

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. Historically, chipmakers have licensed process technologies when unable to develop their own nodes on time, as GlobalFoundries did with Samsung's 14nm-class processes in 2014-2015

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Addressing the AI Infrastructure Chip Shortage

Musk emphasized that without Terafab, he doesn't see a path to having enough processors given the rate at which AI infrastructure is growing

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. The semiconductor industry faces a severe crunch in memory chips as hyperscalers like Amazon and Alphabet expect to spend approximately $650 billion this year building data center infrastructure

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. The shortage is beginning to impact AI accelerators and advanced AI semiconductors needed for xAI, Tesla's autonomous vehicles, and SpaceX's space-based computing ambitions

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. Seaport Research Partners analyst Jay Goldberg noted that even if Musk's ambitious robot-driven chip demand forecasts don't fully materialize, supplying in-house AI chips for Tesla's existing businesses would still represent "real volumes" for Intel

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