In a significant development in the semiconductor industry, Taiwan Semiconductor Manufacturing Company (TSMC) is reportedly in talks to form a joint venture with Intel to operate the latter’s factories. According to a report from The Information, TSMC would acquire a 20% stake in this new entity, while Intel and other U.S. chip manufacturers would maintain a majority share. This potential partnership raises questions about the future of Intel’s manufacturing operations and its separation from its chip design business.
While both TSMC and Intel have refrained from commenting on the report, the news has already had an impact on the stock market. Intel shares saw a modest increase of 2%, closing at $22.43, even as many other stocks fell sharply due to the latest round of tariffs imposed by the Trump administration. Conversely, TSMC’s shares experienced a decline of 7.6%, although much of this drop occurred prior to the joint venture announcement.
The report, which cites two anonymous sources, is part of a broader narrative surrounding Intel’s future. In recent months, there have been various claims about potential partnerships and restructuring within the company, some of which have been met with skepticism. TSMC, known for its financial strength, had previously denied any intentions of acquiring Intel, with board member Paul Liu likening a partnership to “mixing diesel with gasoline.” Liu also mentioned that the TSMC board had not discussed the matter.
The potential investment from TSMC could provide much-needed support for Intel, which reported a staggering $19 billion loss last year, primarily due to an accounting charge. While Intel is not in immediate financial distress, the company has faced increasing pressure from the Trump administration to collaborate with TSMC. This partnership could be a strategic move to bolster Intel’s manufacturing capabilities, which have struggled in recent years due to technological setbacks.
Under the leadership of former CEO Pat Gelsinger, Intel has been working to revitalize its manufacturing processes with advanced production tools. The company is set to introduce a new class of chipmaking technology, referred to as 18A, later this year, which it claims will level the playing field with TSMC. However, Intel faces numerous challenges, including fierce competition from rivals like AMD and a significant shift in the industry towards artificial intelligence—a sector where Intel has yet to establish a strong foothold.
The idea of a corporate breakup has been a topic of discussion for Intel in recent months. However, new CEO Lip-Bu Tan recently emphasized the importance of both Intel’s manufacturing and chip design divisions, suggesting that the company values its integrated approach.
Intel has a history of engaging in joint ventures, most notably with Micron Technology, which began in 2006 and was fully integrated back into Micron a dozen years later. This experience could provide valuable insights as Intel navigates the complexities of a potential partnership with TSMC.
As the semiconductor industry continues to evolve, the outcome of these discussions between TSMC and Intel could have far-reaching implications. A successful joint venture could not only enhance Intel’s manufacturing capabilities but also reshape the competitive landscape of the chip market. Investors and industry analysts will be closely monitoring developments in the coming weeks, as the stakes are high for both companies in this rapidly changing environment.
