Intel will keep working on Elon Musk's Terafab project

Intel will continue working with Elon Musk on Terafab, his venture to manufacture cutting-edge chips. Intel Chief Executive Officer Lip-Bu Tan confirmed the partnership to Bloomberg before an event in Tokyo celebrating the company's 50th year of operations in Japan.

Investor sentiment around Intel had taken a hit earlier in the week after Musk revealed discussions with Taiwan Semiconductor Manufacturing Co. regarding potential collaboration on the same project. Intel originally signed on as Terafab's development partner in April.

The Terafab initiative comes as governments and technology companies race to expand manufacturing capacity for semiconductors and key components required for artificial intelligence. Suppliers across industries, including chip tools, industrial chemicals, ball bearings and slide rails, are currently operating at maximum capacity to meet surging demand.