A semiconductor industry crossroads would require a bold new alliance to put its imprint on the future. In a surprise twist, Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, has reportedly presented the idea of creating a joint venture (JV) with U.S chip giants NVIDIA, Advanced Micro Devices (AMD) and Broadcom to operate Intel foundry division. Reuters reported that according to four sources aware of the matter, TSMC would run Intel’s foundry business with no more than a 50% ownership stake in the venture. Qualcomm has also reportedly been approached regarding the possible deal that may provide a new twist on Intel’s role in the global chip race.
With Intel struggling for a comeback, having reported a net loss of $18.8 billion for 2024, and with the U.S. government wanting to bring back domestic chip manufacturing, the stakes have never been higher. This prospective partnership comes with multiple layers of complexity regarding geopolitical considerations and technological incompatibilities, making it one of the most ambitious yet controversial moves in the industry’s history.
At the early stage of these talks, the discussions arise in the context of the wider U.S. government efforts to establish chip-making facilities in the country. The Trump Administration pressed TSMC to help revive Intel, a former semiconductor industry champion now struggling with a falling stock price and financial losses. The projected partnership comes as a crucial bid to safeguard Intel’s future, surrounded as it is with rising challenges.
Intel’s Financial Distresses
The company has been climbing through the abyss of financial hopelessness, in a net loss of $18.8 billion in 2024, which is the first annual loss for the company since 1986. On the balance sheet, the foundry division that is responsible for contract-chip manufacturing possessed a goodwill value of $108 billion as of December 31, 2023. According to Reuters, Intel stock rose 6% in early U.S. trading on Wednesday, while Nvidia, AMD, Broadcom, and Qualcomm were up between 1.18% and 6.64%. TSMC closed about 1.8% higher in Taiwan. The stakes are high since, within the last year, Intel has seen its stock rocked down, losing more than half of its value.
Among the differences, Intel board members have negotiated with TSMC, seeing the Joint Venture as a possible answer to lift Intel out of its continuous struggles. Still, some Intel executives are against the deal, fearing challenges in merging two very divergent paths of semiconductor manufacturing. The foundry division was once a principal pillar of former CEO Pat Gelsinger’s plan for putting Intel back into the game. Since his exit in December, the company has abandoned several of its initiatives, including its AI chip program.
Role of U.S. Government
The decline in Intel’s fortunes has not gone unnoticed by the U.S. government, and it will continue to be alert in terms of advancing the cause of American advanced manufacturing. With the same token, any prospective agreement that involves TSMC would require the approval of Washington on the grounds that blocking Intel or its foundry operations from total foreign ownership was among the utmost priorities of the officials there. Suggesting TSMC be limited to less than 50% from a national security perspective would, therefore, be in keeping with these premises.
To make matters even more clear, TSMC reaffirmed its commitment to semiconductor production in the U.S. by pledging $100 billion to build five new chip fabrication facilities in the country. Rather interestingly, this development signals a determined effort to support Intel’s position within the semiconductor industry while maintaining control over chip manufacturing.
Challenges
In any potential partnership between TSMC and Intel, whether technical or strategic, significant challenges will exist. The two companies follow different chip fabrication technologies, processes, and supply chains, thus making integration very difficult and possibly very costly. There exist some examples for collaboration such as, Intel has worked with Taiwan’s UMC and Israel’s Tower Semiconductor, however, the proposed scope of collaboration in this case is more extensive.
One of the fiercest matters of conflict is Intel’s own 18A chip manufacturing technology, which claims to be superior to TSMC’s 2nm process. This competitive tension that could shape the future framework of this potential partnership was evident when Intel executives declared in February that their 18A technology was superior. Meanwhile, Nvidia, AMD, and Broadcom are currently testing the manufacturability of their chips in the 18A process for applicability to their products. Should these tests succeed, those very companies may influence the direction of the JV by committing to Intel’s advanced manufacturing.
Intel Foundry’s Future
Presently, the semiconductor industry is at a turning point, with global supply chain repositioning and geopolitics weighing heavily on strategic decisions. A collaboration with TSMC could provide Intel with much-needed assistance, allowing it to draw on TSMC’s experience and operational expertise as it attempts to rebuild itself as a viable competitor in the chip manufacturing domain. The success of the deal will depend on how the parties navigate the pressures of political, technical, and competitive concerns.
As the debates continue, the industry will be watching closely how Intel, TSMC, and potential partners handle whatever complications may arise. If formed, the joint venture could prove to be a game changer for semiconductor manufacturing, reestablishing Intel’s role in the industry while enhancing the resilience of the U.S. chip sector.
