TLDR
- Intel stock rose over 2% in premarket trading after Elon Musk publicly discussed potentially partnering with the chipmaker at Tesla’s annual meeting.
- Tesla CEO said the company may need to build a “gigantic chip fab” to produce enough AI chips for its autonomous driving and robotics goals.
- Musk mentioned Intel as a potential partner, stating “it’s probably worth having discussions with Intel,” though no deal has been signed.
- Intel’s stock jumped 4% in after-hours trading following Musk’s comments, as the struggling chipmaker seeks external customers for its manufacturing technology.
- Tesla is designing its fifth-generation AI chip and already partners with TSMC and Samsung, but Musk says current suppliers won’t meet future volume needs.
Intel stock climbed more than 2% in premarket trading Friday following comments from Tesla CEO Elon Musk about a possible manufacturing partnership. The remarks came during Tesla’s annual shareholder meeting on Thursday.
Musk told the crowd that Tesla probably needs to build what he called a “gigantic chip fab” to produce AI chips. He then publicly mused about working with Intel to make it happen.
“Maybe we’ll do something with Intel,” Musk said to cheering Tesla shareholders. “We haven’t signed any deal, but it’s probably worth having discussions with Intel.”
Intel shares popped 4% in after-hours trading immediately after Musk’s comments. The company declined to comment on the potential partnership.
Tesla is currently designing its fifth-generation AI chip. These chips power the company’s Full Self-Driving software and autonomous driving systems.
Musk said even with best-case production scenarios from current suppliers, Tesla won’t have enough chips. The company already works with Taiwan’s TSMC and South Korea’s Samsung.
Manufacturing Capacity Concerns
“I can’t see any other way to get to the volume of chips that we’re looking for,” Musk explained. He said the proposed facility would need to produce at least 100,000 wafer starts per month.
A small number of the AI5 chips would be produced in 2026. High volume production wouldn’t start until 2027, according to Elon Musk’s Tuesday post on X.
The Tesla CEO described plans for a chip that would be power-efficient and cost-effective. He said it would use about one-third the power of Nvidia’s Blackwell chip at 10% of the manufacturing cost.
Intel’s Position in AI Market
Intel has been working to expand its foundry services as part of a broader turnaround strategy. The chipmaker operates its own manufacturing facilities but has fallen behind Nvidia in the AI chip race.
The U.S. government recently took a 10% stake in Intel. The company needs external customers for its newest manufacturing technology.
A partnership with Tesla could help Intel compete in the fast-growing AI hardware market. Rivals like Nvidia and AMD currently dominate that space.
Tesla shareholders approved a $1 trillion pay package for Musk on Thursday. The compensation plan covers the next decade as Musk aims to transform Tesla into an AI and robotics company.
Musk also mentioned plans for a sixth-generation chip. The AI6 would use the same manufacturing facilities as the AI5 but deliver roughly twice the performance with volume production expected by mid-2028.
“I’m super hardcore on chips right now as you may be able to tell,” Musk said at the meeting. “I have chips on the brain.”
Analyst price targets for Intel range from $18 to $50 per share. The average target sits at $35.04, representing a potential 5.92% downside from the current price of $37.24.