Intel remains a participant in Elon Musk's Terafab semiconductor venture, defying speculation that ongoing talks with TSMC would push the company out of the project, Proactive reported.

The decision settles, for now, one of the central questions hanging over the Terafab initiative: whether the U.S. chipmaker would stay at the table once Musk's camp opened negotiations with the world's largest contract chip manufacturer. Intel will stay.

Why does TSMC's involvement matter?

TSMC sits at the top of the global foundry market and commands the most advanced manufacturing nodes in volume production. Any project of Terafab's stated ambition — gigawatt-scale AI compute — needs a fabrication partner capable of supplying leading-edge silicon at enormous volumes.

Talks between Musk's venture and TSMC signaled that the project's planners were hedging their manufacturing options. For Intel, which has staked its turnaround on rebuilding a competitive foundry business, being displaced from a marquee domestic AI chip program would have carried both financial and reputational costs.

Intel's continued participation keeps the company attached to one of the most closely watched compute buildouts in the industry, even as the venture negotiates with TSMC in parallel.

What does this mean for Intel's foundry strategy?

Intel has spent years repositioning itself as a contract manufacturer for external customers, a pivot aimed at challenging TSMC's dominance. High-profile commitments from large AI-infrastructure buyers carry weight far beyond their direct revenue: they signal to other potential customers that the foundry can meet demanding specifications and delivery schedules.

Staying inside the Terafab venture preserves that signaling value. Exiting, by contrast, would have handed a flagship AI workload to the Taiwanese market leader and deepened doubts about Intel's ability to land top-tier foundry clients.

The retention also matters politically. U.S. industrial policy has pushed to expand domestic leading-edge chipmaking capacity, and an AI venture of this scale committing to U.S.-based fabrication aligns with those objectives. Intel losing the work to TSMC would have cut against that grain.

Is the TSMC option still alive?

Yes. Intel's continued involvement does not end the discussions with TSMC, according to the report. The venture can keep negotiating with the Taiwanese foundry while retaining Intel as a partner.

That leaves several possible outcomes on the table:

• Intel and TSMC split the manufacturing workload, with each handling different nodes, volumes or product generations.
• TSMC takes a portion of advanced-node production while Intel covers capacity elsewhere in the stack.
• The venture uses competitive tension between the two foundries to secure pricing and allocation terms.

Dual-sourcing of this kind is standard practice for buyers who need extreme volumes of advanced silicon. It reduces single-supplier risk in an industry where leading-edge capacity is tightly constrained.

What comes next?

The open question is contractual scope. Remaining "in" the venture is not the same as holding a guaranteed share of its wafer orders. The industry will watch for concrete manufacturing agreements — volumes, nodes, timelines — before treating Intel's position as secured.

For Musk's side, keeping both foundries engaged maximizes leverage. For Intel, it preserves a seat at a project that could anchor demand for U.S.-made AI silicon. For TSMC, the door remains open.

No party has publicly detailed the terms of Intel's continued participation or the stage reached in the TSMC negotiations.