Intel Shares Fall 3 Percent to $109 as Reports of Elon Musk's Terafab Talks With TSMC Hit the Foundry Bet

Intel shares fell about 3 percent on Thursday after reports that Elon Musk's Terafab project is in talks with Taiwan Semiconductor Manufacturing Co., a discussion that undercuts the idea Intel would be the main U.S. foundry for that work.

The stock traded at $109.48, down $3.64, or 3.21 percent, from Wednesday's close of $113.12. It opened at $110.38 and traded between $108.55 and $111.25. Volume was above 28 million shares by late morning. The 52-week range is $32.89 to $142.35. Analysts rate it a buy, with an average target near $111 to $118. Earnings are scheduled for Oct. 29.

Premarket accounts had the shares down about 2 to 4 percent after Musk was reported to have said Terafab, a chip program tied to Tesla, SpaceX and xAI, was talking to TSMC about a dedicated fab. Intel was not quoted in those accounts. TSMC was not quoted. The foundry story Intel has sold to investors is that outside customers, including the largest artificial-intelligence buyers, will fill its factories. A headline that puts TSMC in that conversation, even as a talk, is a mark against that pitch.

The drop also followed a sharp run. The shares had surged 9.1 percent in a recent session and had traded in a $120 to $127 zone before pulling back into the low $110s. A 3 percent day after a 9 percent day is the pattern of a trade being sold, not only of a contract being lost. No filing on Thursday said a Terafab order had moved. No analyst note in the first accounts downgraded the stock. Mizuho had recently pointed to stronger central-processor demand. The shares fell anyway.

Peers were lower with it. Nvidia, AMD and Intel were down in premarket trade even after TSMC reported record sales, a session that separated chip demand from chip valuations. Intel's beta is about 2.2. A stock that has risen from under $33 in the past year to above $140, and that now sits at $109, moves more than the sector when the foundry narrative is questioned.

The company has spent two years arguing that its manufacturing turnaround is the reason to own it. Government support, a foundry segmentation, and named customer talks were the evidence. Thursday's evidence was a report, not a cancellation. Musk has not, in the accounts of the session, said Intel is out. He has been reported as saying TSMC is in the discussion. Those are different sentences. The market traded them as one.

At $109.48 the shares are about 23 percent under the 52-week high and still more than triple the low. The Oct. 29 report is the next number that is not a headline. Until then, the foundry bet is being priced against a rival that already makes the chips Musk's companies buy.