Intel and TSMC have tentatively reached a preliminary agreement to create a joint venture that will operate Intel’s fabs in the U.S., according to Reuters, citing a report from The Information that is based on two sources familiar with the matter. Intel has not yet commented on the matter, but we have reached out to the company for more information.
Under the terms of the agreement, TSMC is said to own 20% of the joint venture. It is unclear which company or companies will own the remaining 80%, but it was reported earlier this year that TSMC approached multiple leading fabless chip designers headquartered in the U.S. — including AMD, Broadcom, Nvidia, and Qualcomm — about investing in the joint venture, which would own multiple fabs in America. Both Nvidia and a TSMC board member later denied the discussions.
This arrangement was reportedly influenced by the U.S. government, specifically the White House and Department of Commerce, as part of efforts to address ongoing operational difficulties at Intel. U.S. authorities view the partnership as a means to stabilize Intel, which IDM 2.0 strategy has faced multiple challenges as the company has so far become a leader neither in products nor in semiconductor production technologies. At the same time, the current U.S. government will not support sales of Intel’s fabs to a foreign investor, especially TSMC.
At this point it is unclear what exactly TSMC’s involvement would be with Intel’s American fabs — which cost tens of billions of dollars — many of which can only be used to make processors for Intel (including fabs capable of producing on Intel 3 and Intel 4 process technologies) and only one or two of which can make processors on Intel’s 18A fabrication technology. It is also unclear how TSMC’s plans to own 20% of Intel Foundry aligns with its own plans to invest $165 million in its Arizona Fab 21 site to make chips for its partners, including Apple.
The financial markets responded quickly to this news. Intel’s stock price increased nearly 7% after the report surfaced, which helped the company to recover after a drop of market capitalization caused by the new import tariffs that will be implemented by the U.S. By contrast, shares of TSMC traded in the U.S. dropped by about 6%, highlighting differing investor reactions to the deal.
As both Intel and TSMC are in their quiet periods, they cannot make any comments regarding future plans or even factors that can impact them materially, but we have reached out for comment.
