Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk, speaking at the company’s first-quarter 2026 earnings call on Sunday, said that the company plans to use Intel Corp's (NASDAQ:INTC) next-generation 14A manufacturing process for chips at Terafab, the advanced AI chip complex he has envisioned in Austin.
Intel Gains A Crucial Outside Customer
Intel CEO Lip-Bu Tan warned last year that the company could exit chip manufacturing if it fails to secure an external customer, highlighting the stakes of any Tesla deal. Intel previously said it was in talks with large customers about 14A but had not identified a major external buyer. The move could hand Intel its first major outside customer for the technology and a badly needed win in its effort to build a contract-manufacturing business to rival Taiwan Semiconductor Manufacturing Co. (NYSE:TSM).
Intel's role in Terafab first surfaced earlier this month, when Reuters reported that Tesla and Musk-controlled SpaceX planned two advanced chip factories in Austin to make processors for vehicles, humanoid robots and space-oriented data centers.
That dynamic was reflected in after-hours trading, where Intel shares climbed roughly 3.14% following Musk’s comments that Tesla plans to adopt Intel’s next-generation manufacturing process for its in-house AI chips.
Tesla Lifts Spending For Austin Ambitions
On Wednesday, Tesla also raised its 2026 capital-spending plan to more than $25 billion from $20 billion, with Musk saying the higher outlay was needed to support future revenue streams.
The Terafab project still lacks major details, including who would pay for costly fabrication equipment, who would operate the site and when production would begin. Musk has said Terafab could eventually generate 1 terawatt of compute capacity annually, compared with about half a terawatt now produced across the United States. He’s also mentioned that the Austin complex may include one leading-edge plant for cars and Optimus robots and another for space data centers.
Musk said, "Given that by the time Terafab scales up, 14A will be probably fairly mature or ready for prime time," adding, "14A seems like the right move, and we have a great relationship with Intel."
Tesla reported first-quarter revenue of $22.71 billion, up 16% year-over-year. Revenue missed the Street consensus estimate of $22.39 billion.
Intel, meanwhile, is scheduled to report its first-quarter 2026 earnings on Thursday, after the market closes, amid high expectations for server CPU demand and AI growth. Analysts expect Intel to report first-quarter revenue of $12.37 billion. That's down from $12.67 billion in last year’s first quarter, according to data from Benzinga Pro.
Analysts See Upside Despite Open Questions
Analysts said the announcement matters even with unanswered questions. Ben Bajarin of Creative Strategies told Reuters Intel's 14A "could turn out to be a bigger deal for Intel than folks thought," saying early design partners help refine leading-edge manufacturing and that Tesla "will definitely have scale, so a great first non-Intel customer."
Seaport Research Partners analyst Jay Goldberg said, "Having a customer is more important than the timing," and added that even if Musk's robot-driven chip-demand forecasts prove too ambitious, supplying Tesla's current businesses would still mean "real volumes" for Intel.
The news arrives after Wedbush's Dan Ives said in March that he sees Terafab as a possible step toward a Tesla-SpaceX merger in 2027, while Gary Black warned that such a deal could cut Tesla's value by 20% to 25% through dilution.
Price Action: Tesla stock was up 0.28% during regular trading and down 0.31% at $386.30 in after-hours trading on Wednesday, according to Benzinga Pro data.
TSLA shows a strong ‘Quality’ score, according to Benzinga Edge Stock Ranking, but faces a negative short- to medium-term price trend.
Photo: Frederic Legrand – COMEO on Shutterstock.com
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