An intriguing prospect has emerged in the semiconductor industry: TSMC’s proposed joint venture with Intel’s foundry division. This collaboration aims to engage major tech players like Nvidia, AMD, Broadcom, and Qualcomm. As per the proposal, TSMC wouldn’t acquire more than a 50% ownership stake, ensuring that the foundry won’t become entirely foreign-controlled. This offers a glimpse into strategic maneuvers that could reshape global semiconductor manufacturing.
In a notable move from September 2023, Intel decided to sell around 10% of its IMS Nanofabrication business to TSMC, valuing this venture at approximately $4.3 billion. This decision strives to boost the independence of IMS, promoting growth in critical areas of semiconductor manufacturing while still keeping the majority of ownership within Intel’s grasp.
Rumors suggest that TSMC has pitched this joint venture to prominent American chip designers, aiming to manage Intel’s factory operations while retaining less than half ownership. The intricacies here connect with prior reluctance from the US government concerning foreign entities managing essential US-based infrastructures. Therefore, both companies must carefully negotiate the terms and secure governmental approval to safeguard national interests.
Internal opinions at Intel regarding selling its design arm vary considerably. Combative perspectives also rise from the technological disputes between TSMC’s processes and Intel’s proprietary 18A technology, which Intel asserts outdoes TSMC’s advancements.
Financially, Intel has been navigating rocky waters, grappling with decreasing revenues and net losses tallying to $126 million in the last quarter of 2024, marking a sharp decline from a profit of $2.7 billion the previous year. To address these financial strains, the company launched an ambitious $10 billion cost-cutting strategy focused on streamlining operations and enhancing competitiveness. This plan involves significant reorganization, reducing the workforce by more than 15%, and trimming down operational expenditures.
While Intel’s foundry division has been particularly impacted—reporting a staggering $13.41 billion loss in 2024—the company is already drawing attention from investment giants like Nvidia, Broadcom, and AMD, the latter contemplating the utility of Intel’s 18A process for its operations.
Notably, Intel recently secured a legal victory, defending itself against allegations of obscuring issues within its foundry business that purportedly resulted in a $32 billion market value drop. The court sided with Intel, ruling insufficient proof that the company intentionally misled its shareholders.
Simultaneously, TSMC is broadening its US footprint significantly. Following a $12 billion announcement in 2020 to establish a semiconductor fabrication plant in Arizona, the company’s commitment has since expanded dramatically. By 2025, TSMC committed an impressive $165 billion for further development — a vast operation including three new plants, advanced packaging centers, and a comprehensive R&D establishment.
This juncture for potential investors represents a double-edged sword. On one hand, engaging with this joint venture enhances strategic direction over Intel’s manufacturing capacities, potentially ensuring top-priority access to production needs. However, it equally demands focused financial and strategic input, especially considering existing dependencies on TSMC’s production capabilities.
The US government views this potential joint venture through a lens focused on strengthening domestic chip production vital for high-stakes sectors like AI and national security. The prominence of a non-domestic leader, such as TSMC, however, could complicate the predominant narrative striving for complete US self-reliance in semiconductor manufacturing.
