Key Points
- Intel shares gained approximately 3.6% during extended trading hours following Elon Musk’s confirmation that Tesla will utilize Intel’s 14A chip process for the Austin-based Terafab facility.
- Tesla represents Intel’s inaugural major external partner for the 14A manufacturing technology, which CEO Lip-Bu Tan considers critical for foundry operations survival.
- First quarter 2026 estimates show Intel posting adjusted EPS of merely 2 cents, declining from 13 cents in the prior year period, with revenues forecasted at $12.4 billion.
- The foundry segment lacks any external customers currently and faces an anticipated $2.4 billion operating loss for Q1.
- Shares reached a 52-week peak of $70.33 recently and have surged 235% year-over-year.
During Wednesday’s Tesla earnings call, Elon Musk revealed significant news regarding the EV manufacturer’s chip production strategy. The announcement confirmed Tesla’s intention to leverage Intel’s upcoming 14A chip manufacturing process for the Terafab complex, an ambitious AI and semiconductor facility under development in Austin, Texas.
Intel shares responded with a 3.6% increase during after-hours trading. Thursday’s premarket session showed the stock at $66.20, reflecting a 1.4% gain.
This partnership arrives at a crucial moment for Intel. CEO Lip-Bu Tan has emphasized that external customers remain essential for foundry business viability. The development costs for the 14A process exceed what internal chip revenue alone can support.
“We have a great relationship with Intel,” Musk said. “14A seems like the right move.”
Musk’s Terafab concept envisions a massive semiconductor and AI campus serving both Tesla and SpaceX operations. Plans include two advanced manufacturing facilities — one dedicated to automotive and humanoid robotics production, another focused on space-based data center development. Musk projects the site could eventually deliver one terawatt of annual computing capacity, double the current half-terawatt output across America.
These projections carry substantial uncertainties. Bernstein analysts calculate that reaching such scale would require investments ranging from $5 trillion to $13 trillion. Critical specifics regarding equipment financing, factory management, and timeline remain unresolved.
Financial Performance Remains Challenging
Despite positive partnership developments, Intel faces difficult near-term financial conditions. Analyst consensus anticipates Q1 adjusted earnings per share of only 2 cents, down from 13 cents in the comparable prior-year period. Revenue projections show a 2% year-over-year decline to $12.4 billion.
The foundry division, central to Intel’s strategic direction, currently serves zero external customers and projects a $2.4 billion operating loss for Q1. The PC chip segment — contributing approximately 57% of first-quarter revenue — faces pressure from a worldwide memory shortage that elevates costs and reduces sales by roughly 7% year-over-year.
AI data center performance has proven challenging for Intel. The company commanded 71% of the data center chip market in 2021 compared to Nvidia. That share collapsed to merely 7% by the previous year.
Assessing the Tesla Partnership’s Significance
Industry analysts approach the Terafab announcement with measured perspective. Jay Goldberg of Seaport Research Partners offered clear assessment: “It’s not equivalent to Apple or Nvidia. But it’s a real customer. It can be real volumes.”
Ben Bajarin of Creative Strategies suggested 14A “could turn out to be a bigger deal for Intel than folks thought,” noting that early design partnerships facilitate technical development processes.
The 14A process timeline targets 2028 for launch, limiting immediate financial contributions. The strategic and symbolic importance remains substantial, however. Tan previously indicated Intel would abandon foundry operations entirely without securing outside customers.
Intel’s stock price reflects considerable optimism. Shares peaked at $70.33 last week — establishing a new high — and currently trade at 92 times projected 12-month earnings. The S&P 500 trades at approximately 21 times by comparison.
Intel releases first-quarter earnings Thursday afternoon.
