- Intel Corp. (NASDAQ: INTC) shares fell 2.6% to $116.19 on Oct. 5 after Elon Musk confirmed that Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) is discussing a potential role in the Terafab chip-manufacturing project involving SpaceX, Tesla and xAI.
The move put renewed attention on Intel stock, which had benefited substantially from its involvement in Musk’s semiconductor plans earlier this year. Intel joined Terafab in April as a strategic partner, with the company expected to contribute chip design, fabrication and advanced packaging capabilities.
The latest development does not mean TSMC has joined the project. Musk said on Oct. 3 that discussions were taking place but did not confirm an agreement. TSMC has also not publicly announced a Terafab partnership.
Why TSMC Talks Matter for Intel Stock
Terafab was presented as a long-term effort to expand chip manufacturing capacity for Musk's businesses. SpaceX has said the initiative ultimately targets one terawatt of compute hardware production per year, with the project intended to reduce potential chip shortages as the company expands its AI computing ambitions.
Tesla and SpaceX are expected to be major users of the technology, with potential applications spanning vehicles, humanoid robots, satellites and AI infrastructure. Reuters previously reported that Tesla planned to use Intel’s 14A manufacturing process for Terafab, potentially giving Intel an important external customer for the technology.
That relationship helped make Terafab relevant to the broader Intel foundry turnaround story. Intel has been investing heavily to establish itself as a contract manufacturer capable of competing with TSMC, while its traditional CPU business remains an important source of revenue.
Intel’s latest results showed second-quarter revenue of about $16.1 billion, while the company has also reported progress with its 18A manufacturing process and continued customer evaluations of Intel 14A. Intel said in its first-quarter materials that it expected early design commitments for 14A to emerge during the second half of 2026 and expand into 2027.
The potential TSMC involvement therefore introduces a different question for investors: whether Terafab will rely primarily on Intel or eventually use multiple manufacturing partners.
SpaceX’s own regulatory disclosures provide important context. The company said Intel joined the project in April but also disclosed that neither Intel nor Tesla is obligated to remain involved and that specific Terafab projects remain subject to separate negotiations and agreements.
That means the current TSMC discussions do not necessarily indicate that Intel is being replaced. They do, however, show that the final structure of Terafab remains unsettled.
Intel’s Broader AI and Foundry Case Remains Separate
The market reaction also needs to be viewed against Intel’s broader recovery. Reuters reported that Intel gained about 34% during September, while the stock had more than doubled during 2026 when measured through the intraday move reported on Oct. 5. That rally has reflected more than Terafab. Intel has benefited from renewed interest in server CPUs, its foundry ambitions and broader demand for AI-related computing infrastructure.
Intel also has relationships beyond Musk’s companies. Barron’s noted that the chipmaker has a multiyear agreement involving Alphabet’s AI cloud infrastructure and a $5 billion co-development arrangement with Nvidia.
Those businesses give investors other factors to evaluate when considering INTC stock, particularly as the company attempts to turn its manufacturing investments into a larger external foundry business.
The competitive backdrop is becoming more important as AI spending expands. Nvidia remains the dominant accelerator supplier, while TSMC manufactures chips for many of the industry’s largest designers.
At the same time, Intel is competing in a market where manufacturing scale, process technology and access to advanced packaging are increasingly strategic. Its broader AI stock position therefore depends on more than a single Terafab project.
For investors watching Intel stock today, the immediate issue is whether TSMC ultimately becomes an additional Terafab manufacturing partner and what that would mean for Intel’s expected role. Musk has confirmed only that discussions are underway, leaving the final structure of the project unresolved.