TLDR
- Intel shares gained over 2% in premarket trading after Tesla CEO Elon Musk discussed a potential chip manufacturing partnership at Tesla’s shareholder meeting.
- Musk said Tesla needs to build a massive chip fabrication facility to meet AI chip demand for autonomous vehicles and robotics.
- No formal agreement exists between Intel and Tesla, but Musk told shareholders discussions with Intel are “probably worth having.”
- Intel stock jumped 4% in after-hours trading as the chipmaker seeks external customers for its manufacturing technology.
- Tesla is designing fifth-generation AI chips and currently works with TSMC and Samsung, but Musk says supply won’t meet future needs.
Intel stock climbed more than 2% Friday morning after Tesla CEO Elon Musk publicly discussed working with the chipmaker. The comments came during Tesla’s annual shareholder meeting Thursday.
Musk told attendees that Tesla likely needs to construct what he called a “gigantic chip fab” to produce AI chips. He then mentioned Intel as a possible manufacturing partner.
“Maybe we’ll do something with Intel,” Musk said. “We haven’t signed any deal, but it’s probably worth having discussions with Intel.”
Intel shares rose 4% in after-hours trading immediately following Musk’s remarks. The company has not commented on the potential collaboration.
Tesla’s Chip Manufacturing Plans
Tesla is developing its fifth-generation AI chip to power autonomous driving systems. These chips run the company’s Full Self-Driving software.
Musk explained that current chip suppliers won’t meet Tesla’s future volume requirements. The company already partners with TSMC and Samsung for chip production.
The proposed facility would produce at least 100,000 wafer starts monthly. Small-scale production of AI5 chips would begin in 2026, with high-volume manufacturing starting in 2027.
Musk described plans for a power-efficient chip at one-tenth the cost of Nvidia’s Blackwell chip. The Tesla chip would consume roughly one-third of Nvidia’s power.
“I can’t see any other way to get to the volume of chips that we’re looking for,” Musk said. “I think we’re probably going to have to build a gigantic chip fab.”
Intel’s Market Position
Intel operates its own manufacturing facilities but trails Nvidia in the AI chip market. The chipmaker is working to expand foundry services as part of its turnaround strategy.
The U.S. government recently acquired a 10% stake in Intel. The company needs external customers for its newest manufacturing technology.
A Tesla partnership could help Intel compete with Nvidia and AMD in AI hardware. The deal would align with Intel’s plans to rebuild manufacturing capabilities and increase revenue through external partnerships.
Tesla shareholders approved a $1 trillion compensation package for Musk on Thursday. The package supports Musk’s vision of transforming Tesla into an AI and robotics company.
Future Chip Development
Musk also revealed plans for a sixth-generation chip. The AI6 would use the same manufacturing facilities as AI5 but deliver double the performance.
Volume production of the AI6 chip is expected by mid-2028. Tesla is currently using its fourth-generation chip in vehicles.
“I’m super hardcore on chips right now,” Musk told shareholders. “I have chips on the brain.”
Analysts set price targets for Intel between $18 and $50 per share. The average target of $35.04 represents a potential 5.92% decrease from the current price of $37.24.
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