Intel Slides as Musk Says TSMC Talks Could Widen Terafab Chip Plans

Intel's stock dropped after Elon Musk indicated that the chipmaker may share the job of building semiconductors for Terafab, his ambitious chip manufacturing venture, with at least one other player.

Musk said discussions with Taiwan Semiconductor Manufacturing Co. are continuing. The remark suggested that Intel, which had been seen as a leading candidate to anchor production for the project, is not guaranteed an exclusive role.

For Intel, the timing matters. The company has spent years and tens of billions of dollars trying to rebuild its contract manufacturing business, known as a foundry, and win outside customers that can fill its new factories. A high-profile order tied to Musk's companies would have been a powerful proof point for investors who remain skeptical that Intel can compete with TSMC on advanced manufacturing. Any sign that a rival could take a share of that work tends to be read as a setback.

TSMC is the world's dominant maker of leading-edge chips and already supplies many of the largest names in tech and artificial intelligence. Bringing it into the conversation would reflect a practical reality. Few companies can match its track record on yield and volume, which are the factors that decide whether a large chip program stays on schedule.

Details on Terafab remain thin. Musk has not spelled out how work would be divided, which chips would be built where, or when production might begin. That leaves open whether a TSMC role would replace, supplement or simply sit alongside whatever Intel is asked to do. Talks are described as ongoing, so nothing has been finalized.

Investors reacted to the uncertainty rather than to any confirmed deal. The selloff shows how much of Intel's recent valuation rests on expectations of foundry wins instead of current results. Until the company announces firm commitments from major customers, comments like this one can move the shares quickly.

The broader takeaway is that large buyers of advanced chips are keeping their options open. Even a project closely associated with a U.S. manufacturing push may end up relying on more than one supplier, and Intel will have to keep proving it belongs on that list.