Intel (INTC) and TSMC (TSM) have reportedly reached a tentative agreement that could revitalize Intel’s struggling foundry business. According to the Information, the two companies have agreed to form a joint venture with other US semiconductor firms that would operate Intel’s semiconductor manufacturing facilities.
Shares of Intel jumped on the news, climbing 2.9%.
TSMC would take a 20% stake in the new organization, and Intel and the other investors would control the rest. In exchange, TSMC would reportedly provide Intel with information about how it builds its chips and provide training assistance for Intel’s personnel.
The deal hasn’t been finalized, and there’s no telling if it will actually come to fruition. Former Intel CEO Pat Gelsinger sought to turn the foundry into a third-party manufacturer for customers akin to TSMC (TSM). But the division is bleeding cash, posting an operating loss of $13.4 billion in 2024. Intel says it doesn’t expect its foundry business to break even until 2027.
TSMC is the world’s largest chipmaker and, over the years, has managed to outpace Intel when it comes to advanced chip manufacturing capabilities. The company produces chips for Intel rivals, including AMD (AMD) and Nvidia (NVDA), as well as Apple (AAPL).
Intel, for its part, says that Microsoft (MSFT) and Amazon (AMZN) will use its foundries and technologies to produce their own custom chips. Still, that’s not enough to offset Intel’s losses.
Shares of Intel are off a staggering 50% over the last 12 months as the company has struggled with sliding quarterly revenue.
By teaming up with TSMC, Intel will be getting a boost from one of its biggest competitors. But the Trump administration, which has been pushing the companies to move forward together, is keen on shoring up the US’s chip manfacturing capacity.
Both Intel and TSMC have announced multibillion-dollar investments in the US and are receiving billions from the CHIPS Act. But even those facilities aren’t enough to supply all of the US’s chip needs.
On Monday, Intel CEO Lip-Bu Tan made his first comments as the company’s new chief executive, saying that he is focused on building out Intel’s foundry business.
“As we strengthen our Intel products, [we] are equally committed to building a great foundry,” he said during his keynote at Intel Vision 2025.
“Global demand for chip production is growing, and you need supply chains that are flexible, resilient, and secure. Intel foundry plays a crucial role. We will continue to advance our foundry strategy to meet our needs,” Tan added.
