Intel slips as Musk says TSMC is in Terafab talks: outside foundry sales were just $293 million last quarter

Intel shares fell Monday after Elon Musk confirmed that Taiwan Semiconductor Manufacturing Co. is in early talks to take part in Terafab, his planned Texas chip-making venture, which Intel joined in April. Outlets differ on the size of the drop: 24/7 Wall St put it at about 4% in morning trading, while TIKR said about 2%. TSMC hit a record high.

Musk described the talks as "Just discussions, but something may come of it," per 24/7 Wall St. No agreement has been reported. Our close report and our SpaceX options piece cover the wider market move.

Why Intel moves on this

Terafab is one of the most visible outside customer wins for Intel's foundry business, which makes chips for other companies. Intel had been the only named manufacturing partner, and its 14A process was the venture's sole named technology, according to the 24/7 Wall St and TIKR write-ups. The size of the business behind that story is small: outside customers brought in just $293 million in the second quarter, while Intel Foundry reported a $2.1 billion loss on $5.8 billion of revenue. That is our reading of both figures as reported by those outlets, not a number from Intel's filing, which we did not retrieve this run.

That gap explains the reaction. A venture that shares the stage with the industry's dominant manufacturer is a weaker proof point than one Intel holds alone. 24/7 Wall St noted the decline was stock-specific: AMD fell about 0.8%, Nvidia rose about 0.5% and the semiconductor ETF SOXX slipped about 0.7%.

Two ways this can read

• Competitive: TIKR called it a setback for the foundry comeback. In one structure it described, TSMC would operate the Texas facility with Terafab as anchor customer, which would sideline Intel's process.
• Not decided: TIKR also noted TSMC might build its own site, which could leave Intel's role intact.

Separately, 24/7 Wall St said Susquehanna flagged possible CPU share losses for Intel in laptops and desktops in the third quarter, with AMD gaining. It is an analyst view, not a reported result.

What we are watching

• Whether TSMC and Terafab announce anything formal.
• The arrival of Intel's 14A design kit, which TIKR lists for October.
• Intel's next quarterly report for outside foundry revenue.

Intel's filings are on SEC EDGAR.

Sources: 24/7 Wall St, TIKR, Quartz and Bloomberg headlines. Some data may be delayed. This is market information, not investment advice.