Intel Corporation (NASDAQ: INTC) shares fell 2.8% to $95.37 on Thursday amid questions about its potential role in Elon Musk’s proposed Terafab project after Taiwan Semiconductor Manufacturing Co. (TSMC) confirmed talks about joining the complex and insisted on operating any chipmaking facility it joins.
Intel shares fell as low as $90.02 during the session, extending their October losses. Semiconductor stocks also declined amid hotter U.S. inflation data and concerns about AI infrastructure spending.
TSMC Sets Operating Condition for Potential Terafab Role
TSMC Chief Executive C.C. Wei said during the company’s third-quarter earnings call that the chipmaker had sent teams to Texas to evaluate manufacturing expansion opportunities beyond its existing operations in Arizona. The company was also discussing whether it could use capacity at Elon Musk’s proposed Terafab complex in Texas.
Wei emphasized that TSMC would have to operate any chipmaking facility involved in a Terafab arrangement, adding that no firm agreement had been reached.
That position differs from Musk’s stated plan for Tesla and SpaceX to build and operate Terafab themselves. Musk said earlier this month that TSMC’s potential involvement could be limited to leasing space at the complex.
The discussions concern Intel because the company joined Terafab in April and was expected to contribute expertise in chip design, manufacturing and advanced packaging. The project aims to produce processors for Tesla vehicles, humanoid robots and AI computing systems.
Musk subsequently said Tesla planned to use Intel’s next-generation 14A manufacturing process for Terafab. That technology is still under development, and Intel has been seeking external customers to support its advanced contract-manufacturing business.
However, Intel’s involvement does not guarantee future chip-production orders.
A SpaceX filing with the Securities and Exchange Commission states that specific Terafab projects, including their investment commitments and development schedules, remain subject to separate negotiations and agreements. The filing also states that neither Intel nor Tesla is obligated to remain involved.
Hotter Inflation Data Deepens Global Semiconductor Selloff
The Terafab developments came amid a broader semiconductor selloff after U.S. inflation reports raised concerns about future interest-rate increases.
The Bureau of Labor Statistics reported Wednesday that consumer prices rose 0.6% in September, lifting annual inflation to 3.7% from 3.4% in August. Core inflation increased to 2.6% annually from 2.4%. Thursday’s producer-price report showed wholesale prices rose 1.3% in September, while annual producer inflation reached 6.3%.
The figures revived expectations of possible Federal Reserve rate increases, although futures markets continued to favor unchanged rates at the central bank’s October meeting. Higher interest rates increase financing costs for semiconductor factories and AI data centers, adding to concerns about the scale of AI infrastructure investment and its potential returns.
In Thursday’s U.S. trading, the Philadelphia Semiconductor Index fell about 1%, extending its losing streak to seven sessions, even as the broader S&P 500 and Nasdaq Composite finished higher.
Intel’s closing price left the stock about 20.7% below its September 30 close of $120.23, reflecting a sustained decline in October.
The company is scheduled to report third-quarter financial results on October 29, providing its next quarterly update on financial performance and business operations.
