Tesla will use Intel’s forthcoming 14A semiconductor technology for chip production at its planned Terafab facility in Austin, Texas according to the automotive firm’s CEO Elon Musk, reported Reuters.
The deal positions Intel to supply its next-generation chip designs for Tesla’s AI processor projects, marking the first major external customer for the 14A process.
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Intel has stated in the past that it is in talks with several companies about the 14A technology, though Musk’s announcement is the first time a prominent customer has been identified.
The development is viewed as a significant move for Intel as it seeks to grow its contract chip manufacturing operations to better compete against industry leader TSMC.
Intel leadership has previously indicated that the company may exit contract manufacturing if it does not attract key clients.
Investors responded to the news with Intel’s share price rising by 3.6% in after-hours trading.
Tesla, meanwhile, signalled an increase in capital investment, with Musk describing this as vital to future revenue plans.
Despite this, Tesla’s shares saw a slight decline after markets closed.
Earlier this month, Intel partnered with Musk’s Terafab project alongside SpaceX and Tesla to manufacture processors for AI, robotics, and data centre applications.
Musk has outlined plans for Terafab to construct two advanced chip production facilities at the Austin site.
One will focus on chips for vehicles and humanoid robots, and the other will produce processors for space-based data centres.
Specifics regarding the responsibilities for funding, operation, and commissioning of the Terafab complex have not yet been detailed.
Musk has stated that the site will aim to generate one terawatt of annual computing power, a significant increase over the current national output in the US.
The Tesla CEO said: “Given that by the time Terafab scales up, 14A will be probably fairly mature or ready for prime time. 14A seems like the right move, and we have a great relationship with Intel.”
Tesla has also released its results for the first quarter of 2026, delivering a stronger performance than market watchers had anticipated. Earnings per share came in at $0.41, ahead of the $0.36 consensus estimate, which is an upside of 13.89%.
The company’s revenue for the quarter also edged past projections, reaching $22.39bn compared with the expected $22.28bn.
