Intel stock jumps after announcing that it will produce chips for Musk’s companies

Stock Intel jumps about 3% at this time in trading on the Nasdaq after it announced this afternoon (Tuesday) that it will produce chips for Elon Musk’s conglomerate of companies. In its announcement, Intel stated that it will “join the ‘Terra Fab'”, a complex of two chip manufacturing plants that will be built in Austin for Musk’s two technology companies: Tesla on the one hand, and SpaceX on the other, which merged with the artificial intelligence company xAI, and which is looking to go public later this year at a value of $1.75 trillion.

According to the assessment, this is much more than the production of processors for vehicles at Tesla or launchers at SpaceX – at Tesla they are building a new era of human-like robots used as domestic helpers and production workers, while at SpaceX they are building on expanding the construction of server farms for artificial intelligence processing on Earth and in space. The term Musk coined, “terra-fab,” implies the production of a total of a terawatt — one million megawatts — of artificial intelligence processing capacity per year. Intel jumped 41% since the beginning of the year and its value stabilizes at 261 billion dollars.

However, Intel’s brief announcement, without expanding or elaborating on the nature of the collaboration between the companies, left room for aNo question. The wording of the announcement was that “Intel is joining the project” and not necessarily taking ownership of it, that is, it is possible that the company will be a partner in some of the production lines.

Intel has not yet proven that its factories are capable of producing graphics processors for artificial intelligence, which require electrical circuit geometries smaller than 5 nanometers, a capability currently found exclusively by competitor TSMC. Intel, indeed, achieved the ability to produce processors with a technology lower than 2 nanometers, but for the field of personal computing, and at the very least these are core processors only. Intel exports its AI processors to TSMC.

Therefore, it is estimated that Intel will take part in places where it has comparative advantages, such as the field of assembly and packaging of chips, or will focus on the production of some chips for robots and spaceships, but not all. If Intel can prove that it makes GPUs for xAI servers, it will be a significant leap forward for the company and allow it to finally compete effectively with TSMC.