Tesla (TSLA) is exploring a potential partnership with chipmaker Intel (INTC) to develop a chip manufacturing facility as it ramps up its AI ambitions. CEO Elon Musk said the company may need to build “a gigantic chip fab” to meet future demand. The news comes as Musk’s record-breaking $1 trillion pay package wins shareholder approval, marking a pivotal moment for both Tesla’s growth and its leader.
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Following Musk’s remarks, TSLA stock is up 1.57% in pre-market trading Friday, while INTC is up 2.60%.
‘Worth Having Discussions,’ Says Musk
At the company’s annual meeting, Musk shared potential manufacturing plans, hinting that Tesla could team up with Intel. He said, “You know, maybe we’ll do something with Intel,” adding, “We haven’t signed any deal, but it’s probably worth having discussions with Intel.”
Additionally, Musk floated the idea of Tesla building its own chip factory to meet the growing demand driven by its robotaxi and robotics ambitions. Currently, Tesla partners with TSMC (TSM) and Samsung (SSNLF) to produce its AI chip series used in its EVs.
Notably, during the company’s third-quarter update, Musk confirmed that both of these chipmakers will manufacture Tesla’s upcoming AI5 chip at their U.S. facilities, adding that the EV company has no plans to replace Nvidia (NVDA) as its primary data center hardware supplier.
What a Tesla Deal Could Mean for Intel
A potential deal with Tesla could give Intel a much-needed lift, as the chipmaker has struggled to keep up with rivals such as Nvidia in the AI boom.
In August, the U.S. government acquired a 10% stake in Intel, adding pressure for the company to secure major external customers for its latest manufacturing technology. Intel declined to comment.
Is Tesla a Buy, Sell, or Hold?
On Wall Street, analysts have maintained a neutral stance on Tesla stock. According to TipRanks, TSLA stock has received a Hold consensus rating, with 13 Buys, 15 Holds, and eight Sells assigned in the last three months. The average Tesla stock price target is $395.54, suggesting a potential downside of 11.3% from the current level.
