Intel declines: Share in "Terra Fab" threaten?

The American chipmaker is recording clear declines in pre-market trading during Monday’s session. The drop is hovering around 4%.

These declines were driven mainly by Elon Musk’s comments about TSMC cooperating with the “Terra Fab” joint venture. By way of reminder, the “Terra Fab” initiative is a project for a huge, vertically integrated processor manufacturing process that is meant to deliver an almost unrivaled price and volume while maintaining advanced products.

Intel was expected to be part of the Terra Fab initiative, with the company acting as a supplier of manufacturing process technology for chip production. Specifically, this refers to the “Intel 14A” process, i.e., manufacturing chips in 1.4 nm technology.

A seat at the table

Elon Musk commented on his platform “X” in response to analyses by a columnist on the “Substack” platform named “Culpium.” “Culpium” pointed to sources inside TSMC suggesting that possibilities for cooperation between TSMC and representatives of Elon Musk’s companies were being explored. The CEO of Tesla and SpaceX reportedly confirmed these speculations.
A correction from Elon Musk quickly followed. He indicated that if TSMC cooperation were to develop in the context of Terra Fab, it would be supplementary in nature. However, the degree of this “supplementation” was not specified, placing Intel in an uncomfortable position.

The return of the king, or the return of problems?

Intel itself can boast an impressive rally in its shares, currently showing about a 220% increase since the beginning of the year. Given that the company is still generating significant net losses, it must achieve a great deal of its stated goals to justify a market capitalization of around USD 630 billion.

Intel price chart (D1)

Source: xStation5

Intel’s participation in Terra Fab is not only a matter of financial success or failure. Successful integration of the Intel 14A process within Elon Musk’s project would be a clear message to the market that the company’s solutions are not only returning to the technological vanguard in terms of declarations, but also operationally. It would be a starting point for regaining some trust, prestige, and most importantly, market share. The need to “share” success with TSMC calls the validity of this scenario into question.

Sentiment versus facts

The scale of any potential disappointment is difficult to estimate at present. Intel has not published any forecasts or expectations related to its participation in Terra Fab.

Even the target settlement or revenue-sharing mechanisms between project participants are not publicly known. At the moment, the only point of reference is an answer from the Q1 2026 earnings call, in which Intel representatives, asked whether revenue from Terra Fab would be counted as “foundry” revenue, responded that the relationship is “very broad” and details would be provided later. This allows observers to infer deep integration of Intel into the project and potentially a meaningful share in profits, but for now these remain only speculations.

Equally important, if not more so, the assumption that Intel would remain the sole supplier of technology and solutions for a project as enormous as Terra Fab was optimistic, if not naive. TSMC, which currently accounts for about 80% of contract “AI” chip production, is estimated, based on dispersed customer data, to produce around 5–10 million processors of this type per year. The Terra Fab initiative targets annual production of around 100–200 million chips. Even if Elon Musk’s project reached only 10% of the target volume, that would mean at least matching TSMC’s production volume, which would imply almost doubling global production.