intel-tsmc joint venture in jeopardy? chips act subsidies complicate plans
Taipei, Tuesday, 29 April 2025.
intel and tsmc’s ambitious joint venture faces significant hurdles. concerns arise from the chips act subsidies. intel’s reliance on these subsidies limits its options. a reduced stake below 50% could trigger a ‘change of control’ clause. this would lead to the recovery of subsidies. the potential clawback jeopardizes the financial viability of the entire joint venture, casting doubt on the future of this major collaboration. analysts are questioning the benefits of this venture.
Wall street’s skepticism
Wall Street analysts are expressing reservations about the potential collaboration between Intel and TSMC [1]. Citi bank analysts emphasize that the differences in chip manufacturing processes between Intel and TSMC pose significant challenges to the success of any joint venture [1]. Concerns are mounting that splitting Intel’s foundry business could strain cash flow and introduce further uncertainties [1]. These factors contribute to the overall skepticism surrounding the feasibility and potential benefits of the proposed joint venture for both companies.
Competitive landscape and market dynamics
The competitive landscape could intensify if the joint venture proceeds [1]. A successful partnership might attract more IC design firms, intensifying competition in the global chip market [1]. Intel and TSMC would need to ensure their market positions complement each other, avoiding excessive competition that could erode profits [1]. The need for careful market positioning and strategic alignment is crucial for the joint venture’s success in a highly competitive environment. This alignment is vital to prevent cannibalization and ensure profitability for both entities.
Technical and talent considerations
Chip manufacturing demands substantial R&D investment and experienced engineers [1]. Despite technical differences, Intel and TSMC must invest heavily in R&D and talent development to ensure the joint venture’s success [1]. Over 70 leading entities in the industry chain have gathered [5]. These investments are essential to bridge technological gaps and foster innovation within the collaborative entity. The need for skilled personnel and cutting-edge research is paramount for maintaining competitiveness and achieving long-term growth.
Regulatory and legal hurdles
Regulatory approvals from global bodies are essential for any split plan [1]. This increases the complexity and time needed for implementation. Post-split, the company could face legal and intellectual property issues [1]. These challenges require careful navigation to ensure compliance and protect the interests of all parties involved. The regulatory landscape adds a layer of complexity to the joint venture, potentially impacting timelines and increasing operational costs [alert! ‘this is high-level speculation based on the facts given’].
JPMorgan’s perspective on tsmc
JPMorgan’s report addresses market concerns regarding TSMC’s potential involvement in Intel’s joint venture or rescue plan [2]. Such involvement could negatively impact TSMC’s long-term returns and market position [2]. TSMC’s $100 billion investment in the USA signals its strategic direction [2]. Clarifying its stance on a joint venture with Intel during earnings reports should boost investor confidence [2]. JPMorgan anticipates TSMC becoming the largest provider of advanced process capacity in the USA by 2028 or 2029, securing substantial outsourcing business from Intel [2].
Impact on tsmc’s stock
JPMorgan lowered TSMC’s target price from NT$1,300 to NT$1,275 [2]. However, the firm suggests TSMC’s clear message on the Intel joint venture could lead to a short-term stock rebound [2]. This rebound is particularly likely if semiconductor tariffs do not materialize [2]. JPMorgan maintains a ‘Shareholding’ rating for TSMC [2]. The firm expects relatively excellent performance for the stock in the coming months, contingent on these factors [2].
Intel’s foundry day and strategic outlook
Analysts suggest Intel’s ‘Foundry Day’ will be a key moment [3]. Cantor Fitzgerald analyst C.J. Muse anticipates Intel providing a disappointing second-quarter outlook [3]. Intel may refrain from offering full-year guidance under new CEO Lip-Bu Tan [3]. Muse believes Tan will use this opportunity to recalibrate metrics amid volatility [3]. He is optimistic about Intel reaching some form of manufacturing joint venture [3]. However, he dismisses rumors of TSMC taking over Intel’s chip manufacturing plants [3].
Alternative collaborations and market dynamics
Muse suggests a consortium of Intel’s clients, such as Nvidia, AMD, Qualcomm, or Apple, is more likely [3]. He views the ‘Foundry Day’ as a significant catalyst for Intel’s stock [3]. Prior to this, TSMC’s CEO stated the company is not involved in joint venture or technology transfer talks [3]. Muse lowered Intel’s stock target price from $29 to $26, citing a critical strategic transition [3]. He maintains a ‘neutral’ rating on Intel’s stock, acknowledging the challenges ahead [3].