Intel's Terafab tie-up draws $145 target from Tigress

Intel has historically been most closely associated with CPUs, but the company has been working to build out a foundry business that makes chips for others. The Terafab partnership, with companies associated with Elon Musk — SpaceX, Tesla, and xAI — is aimed at producing advanced chips for artificial intelligence, robotics, autonomous vehicles, and other compute-intensive applications.

Tigress Financial's September 15 note frames the alliance as a way for Intel to expand its addressable AI foundry opportunity. Securing outside customers could raise production volumes, and engagement with demanding customers could offer chances to improve manufacturing yields and scalability, which would matter as Intel tries to strengthen its position in advanced chip manufacturing. Intel's second-quarter earnings report also pointed to advanced packaging and its wafer foundry network as paths to sustainable growth, and the company cited momentum in Physical AI and robotics, with more than 130 customers using or testing its Core Ultra Series 3 and Core Series 3 processors for edge AI and robotics applications.

The question is whether the Terafab relationship turns interest into committed volume. Intel's foundry economics would likely hinge on how many external customers it actually signs and whether yields and production costs improve enough for the foundry to contribute meaningfully to profitability — an outcome Tigress Financial expects but that is not yet assured.