could a TSMC-Intel alliance reshape the chip industry?
Taipei, Monday, 17 February 2025.
The Trump administration’s push for a partnership between Taiwan semiconductor manufacturing company (TSMC) and Intel is stirring the semiconductor sector. This strategic move aims to boost the U.S. domestic chip industry and safeguard national interests. However, the initiative faces possible resistance due to concerns over foreign operation of American facilities. The potential collaboration between TSMC, a global chip-making leader, and Intel could reshape both companies’ futures and significantly impact the stock market. TSMC’s possible involvement in running Intel’s factories might signal a shift in U.S. manufacturing strategies. Analysts are divided on the feasibility of such a partnership and its implications for both companies, predicting complex adjustments. Reactions to this news have already affected the stock performances of both Intel and TSMC. As Intel explores new paths, industry observers keenly watch how the geopolitical landscape will influence market dynamics.
White House signals caution on foreign control
A White House official has indicated that the Trump administration may oppose foreign entities operating Intel’s U.S. chip factories [1][3]. While the administration supports foreign investment in American manufacturing, it appears hesitant about TSMC, a Taiwanese company, taking control of Intel’s facilities [2]. This stance emerges despite earlier reports of Trump’s team meeting with TSMC officials to discuss potential collaboration [3].
Market impact and stock performance
The negotiation talks have triggered significant market movements. Intel’s stock has surged 22% following U.S. Vice President JD Vance’s statements about ensuring AI systems are built with American-manufactured chips [2]. Meanwhile, TSMC’s stock has declined, dropping 2.75% to NT$1,060 following the partnership speculation [1].
Technical and operational challenges
Industry experts highlight substantial technical hurdles in any potential partnership. TSMC employs 2,000 to 3,000 researchers focused on 2nm and advanced processes [7]. Analysts from Baird suggest that Intel’s facilities could be restructured into a new entity jointly owned by both companies [3][4]. However, each manufacturer uses unique operational methods and technologies [3], making integration complex [GPT].
Strategic implications
Intel faces a critical juncture as it considers this partnership. The company has lost nearly $40 billion in cash over three years [2]. A collaboration with TSMC could help Intel transition toward a design-focused business model, similar to companies like Broadcom or AMD [3]. However, this would represent a significant departure from Intel’s integrated manufacturing approach [2][3].