Intel CEO internal memo: All details of Musk's Terafab super chip factory to be disclosed within weeks

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Musk’s ambitions in chip manufacturing are accelerating. Intel CEO Lip-Bu Tan issued an internal memo to employees last week, promising to disclose the “scope and nature” of the company’s involvement in the Terafab project “within weeks,” marking an acceleration toward the public launch of this grand plan aimed at reshaping the semiconductor manufacturing landscape.

According to the memo obtained by CRN, Lip-Bu Tan sent out the information to all Intel employees last Friday. The timing was just two days after Intel officially announced its partnership with Musk’s SpaceX, xAI, and Tesla on the Terafab project. Intel will play a deep role as a foundry service provider in this project, seen as a crucial lever for its own transformation and revitalization efforts.

The near-term goal of Terafab is to establish a pilot production line in Austin, Texas, with plans to begin wafer manufacturing in 2029, starting with a monthly capacity of 3,000 wafers.

On the supply chain front, according to previous reports from Bloomberg, the Terafab team has already sent requests for quotations to equipment giants like Applied Materials, Tokyo Electron, and Lam Research, demanding a “lightspeed” response. The project's ultimate vision is to supply one terawatt of computing power per year, directly challenging TSMC’s leadership in advanced process technology. Bernstein analysts estimate total capital expenditures required for the project’s full realization to be as high as $5 trillion to $13 trillion USD.

Intel Internal Memo: Details to be Revealed Within Weeks

According to CRN, Lip-Bu Tan made it clear in the memo that the scope and nature of Intel’s participation in the Terafab project will be disclosed to employees, but did not provide further specifics on timing.

Previously, Musk visited Intel’s headquarters in Santa Clara. Lip-Bu Tan then posted a photo from their meeting on social media, which was also attended by Intel board member Ira Ehrenpreis. This is the most direct public record to date of interaction between Intel executives and the Terafab team.

Intel regards this collaboration as a key component of its efforts to revitalize its foundry business.

Recently, the company has been working to turn Intel Foundry Services into an independent manufacturing platform capable of handling external customer orders, actively seeking endorsement from major clients such as Nvidia. The addition of Terafab is seen as a crucial milestone that brings substantial content to this strategy.

Terafab’s Two-Phase Blueprint: Automotive, Robotics, and AI Chips in Parallel

According to information revealed by CRN, the Terafab project will proceed in two phases: the first phase focuses on building fabs for automotive and robotics chips, while the second phase will shift to mass production of AI chips.

In terms of end applications, the chips produced will mainly serve Musk’s xAI artificial intelligence business, the Optimus humanoid robot, and Robotaxi, while also covering space data centers for SpaceX and xAI. Musk has stated that xAI is expected to consume the majority of the production capacity.

Regarding capacity, the project plans to start a pilot line in Texas in 2029 with an initial monthly output of 3,000 wafers, which will be gradually increased as the project scales up. The project also seeks to internalize the entire process from mask production to test packaging, and is recruiting engineering talent from Applied Materials, Samsung, and TSMC.

Tesla’s recently disclosed A15 chip is currently fabricated by TSMC and Samsung, but moving its production to Terafab’s own line is seen as a key target once the project is up and running. Additionally, Tesla has confirmed it is developing the next-generation A16 chip and the Dojo3 supercomputer project.

Capital Threshold and Technical Route Remain the Biggest Uncertainties

Despite the clear acceleration, there are still persistent doubts externally about the feasibility of Terafab. Bernstein analysts estimate that the full realization of the project would require between $5 trillion and $13 trillion in capital expenditures—the largest single investment proposal in semiconductor industry history.

According to previous reports from Bloomberg, Tammy Qiu, head of technology equity research at Hamburg-based Berenberg, said, “The intent of the project is real,” but she does not expect substantial progress within the next two years. She stated that Berenberg has not yet included Terafab in its financial forecasts for ASML. As the world’s only supplier of extreme ultraviolet lithography machines, ASML is indispensable to any company hoping to mass-produce advanced process chips, but so far it is unclear whether the Terafab team has engaged with the Dutch firm.

Currently, Terafab has not placed any fixed equipment orders, nor have its technological route and final production site been determined. It is also not yet clear whether the project will expand to multiple locations beyond Texas. According to Bloomberg, after receiving a request for cooperation from Terafab, Samsung did not respond directly but instead proposed assigning more foundry capacity to Tesla in its planned factory in Taylor, Texas, as an alternative option.

With Intel’s CEO pledging to disclose further details within weeks, the market is expected to receive the most comprehensive roadmap yet for Intel’s involvement in Terafab. Whether this information can dispel doubts about the project’s feasibility remains to be seen.

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