Intel shares climbed around 3.5% in on Tuesday after the chipmaker announced it had joined the Terafab project alongside SpaceX, xAI, and Tesla.
The rally stood in contrast to broader market weakness.
The S&P 500 fell 0.5%, while the Dow Jones Industrial Average declined 0.6% and the Nasdaq Composite dropped 0.8%.
Investor sentiment was weighed down by geopolitical concerns as Donald Trump’s deadline for Iran to reopen the Strait of Hormuz approached, with hopes of a deal fading.
Terafab project signals AI ambitions
The Terafab initiative is aimed at building large-scale chip manufacturing capacity for artificial intelligence and robotics.
Intel said its capabilities would help accelerate the project’s goal of producing one terawatt per year of compute.
The announcement follows earlier plans outlined by Elon Musk, who said Tesla, SpaceX, and xAI would build advanced chip factories at a large site in Austin, Texas.
One facility is expected to support vehicles and humanoid robots, while another would focus on AI data centres in space.
Intel CEO Lip-Bu Tan highlighted the strategic importance of the collaboration.
“Elon has a proven track record of re-imagining entire industries. This is exactly what is needed in semiconductor manufacturing today. Terafab represents a step change in how silicon logic, memory and packaging will get built in the future."
Separately, SpaceX has confidentially filed for a US initial public offering, potentially setting up one of the largest listings on record.
The company is targeting a market debut later this year.
The development adds to the broader ecosystem being built around AI infrastructure, with Intel positioned as a key manufacturing partner.
Turnaround efforts gain traction
The partnership comes as Intel continues its turnaround under Tan, who has led the company for more than a year.
The chipmaker has been restructuring its operations through cost cuts and asset sales.
It has also secured substantial backing from investors, including Nvidia, and support from the US government, which has taken a stake as part of efforts to strengthen domestic semiconductor production.
Last week, Intel said it would spend $14.2 billion to buy back the 49% stake it had previously sold to Apollo Global Management in its Ireland manufacturing facility.
The move restores full ownership of the Leixlip plant and signals renewed confidence in its manufacturing business.
Shares had surged more than 6% following that announcement.
Foundry losses and competitive pressures
Despite improving momentum, challenges remain. Intel’s contract manufacturing division, Intel Foundry, continues to post significant losses.
The unit reported an operating loss of $10.32 billion in 2025, while revenue grew just 3%.
The company also missed much of the initial surge in AI-driven demand, allowing competitors to establish an early lead.
However, rising demand for inference workloads—where AI systems generate outputs—has begun to support interest in Intel’s processors.
The Terafab partnership underscores Intel’s effort to reposition itself within the AI value chain, even as it works to stabilise its financial performance and close the gap with rivals.
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