Intel shares (INTC) slipped about 2% in Monday morning trading after Elon Musk confirmed that Taiwan Semiconductor Manufacturing Co. (TSMC) is in discussions to participate in his Terafab chip-making venture. The news raised concerns that Intel may not be the sole or primary manufacturing partner for a project that has been a major driver of its stock's dramatic rally this year.
TSMC's US-listed shares gained 1.4% on the news, while Intel's stock has surged roughly 200% year-to-date, compared with a 50% gain for TSMC's US-listed shares.
TSMC's Potential Role in Terafab
Musk confirmed the discussions on Saturday in response to a report from the Asian technology Substack Culpium, which said TSMC was exploring ways to help operate the planned factories. "In discussions, but something may come of it," Musk posted on X.
Oppenheimer analyst Rick Schafer suggested one possibility is "TSMC owning and running a fab that serves only Tesla, SpaceX and xAI, while SpaceX invests or commits to volume," according to a note to clients published Monday. Musk later indicated that any chips produced by TSMC would likely supplement, rather than replace, those supplied by Intel.
Still, the prospect of another major chipmaker joining Terafab could complicate expectations around Intel's role in the project, which has been a key catalyst for its stock.
Terafab's Impact on Intel's Rally
Musk announced Terafab in March, with Tesla and SpaceX jointly leading the project. The companies aim to manufacture 1 terawatt of computing capacity annually, roughly twice the amount needed by the entire United States. Musk had initially discussed a potential deal with Intel in November 2025, saying his companies' existing suppliers could not produce enough chips to meet their needs, with Tesla and SpaceX potentially requiring as many as 200 billion AI chips annually.
D.A. Davidson managing director Gil Luria said enthusiasm around Terafab has been a major catalyst behind the "dramatic ascent" of Intel's stock this year. "If it turns out Intel does not participate, or is only one fab technology provider, investors may reconsider the credit they gave Intel," Luria told MarketWatch. He added that the prospect of working with another manufacturer could be viewed "as a lack of confidence in trusting the future of his important endeavor to Intel alone."
Competitive Pressures Beyond Terafab
Intel's challenges extend beyond the Terafab project. Susquehanna analysts said Monday that Intel likely continued losing CPU model share in both laptops and desktops during the third quarter, while AMD gained ground and Qualcomm reached its highest laptop share yet, as reported by Investing.com.
Susquehanna estimates Intel's laptop model share fell 3.9 percentage points from the previous quarter to 68.1%. AMD's share rose 3.1 points to 29.3%, while Qualcomm increased to 2.2%. Intel's new Panther Lake processor, built on its 18A process, accounted for about 1.8% of Intel-based laptop SKUs, up from 0.4% in the previous quarter, with the ramp ahead of Lunar Lake's trajectory but roughly in line with Arrow Lake.
Intel's desktop model share also declined 1.6 percentage points to about 76%, its lowest level in the firm's study since the second quarter of 2023.
This article is for informational purposes only and does not constitute financial advice.
