Intel Serves as a Safety Net for US Fabless Chip Companies Including Apple, NVIDIA, and AMD Amid TSMC Supply Chain Risks, According to Expert Analyst

According to industry analysts, Intel has emerged as a crucial safety net against geopolitical and supply chain vulnerabilities linked to reliance on TSMC. This perspective posits that Team Blue’s services will eventually be essential for the semiconductor ecosystem.

Analyst Insight: “You Don’t Need It Until You Need It”— Intel as a Potential TSMC Alternative

Intel’s position in the semiconductor industry has shifted significantly in recent years. As the sole domestic manufacturer working on state-of-the-art nodes in the United States, Intel finds itself at a crossroads. While the Trump administration pushed for increased domestic production, companies like TSMC have intensified their investments in U. S.operations, gaining considerable traction in the market. This raises critical questions regarding Intel’s strategic role in the American chip manufacturing landscape. Renowned analyst Ben Bajarin highlighted this in a recent Stratechery podcast (courtesy of Ray Wang), suggesting that Intel serves as an essential insurance policy for U. S.-based fabless companies amid rising geopolitical uncertainty.

At the end of the day, Intel existing is the single most important piece of insurance for an Apple, for an AMD, for an Nvidia, for a Qualcomm, for basically every single US fabless chip company. The reason why insurance is the right analogy is because in any normal state of affairs, they don’t need Intel.

These insights reveal a seldom-discussed aspect of the semiconductor industry. Currently, TSMC enjoys the limelight, providing chips for major tech corporations. Anticipated demand for future technological nodes like the N2 and A16 reinforces the notion that TSMC continues to be the preferred supplier for companies such as Apple, NVIDIA, and AMD. However, the question arises: what if geopolitical tensions disrupt chip production?

TSMC meets their needs, and they meet their needs better, and that’s why they’re not signing deals with Intel. But the point of insurance is you don’t need it until you need it. If they don’t want to go out of business, if something happens to TSMC, then they need to buy insurance.

Bajarin asserts that, although companies are not seeking alternatives to TSMC right now, the looming threat of geopolitical instability necessitates considering firms like Intel. Presently, Taiwan is responsible for over 90% of the world’s advanced semiconductor production, as noted by Commerce Secretary Howard Lutnick. Should geopolitical risks emerge around Taiwan, this could spell disaster for the global supply chain of cutting-edge chips.

TSMC’s New Production Strategy Amid Global Concerns

As we consider Intel’s potential role, it’s crucial to examine TSMC’s strategy in addressing supply chain disruptions. The Taiwan-based giant is making significant strides to expand its manufacturing capabilities in the U. S., hastening the timelines for advanced processes, including 2nm technology. Reportedly, TSMC has committed to approximately $300 billion in investments, positioning the United States as a critical alternative to its Taiwanese operations.

Colorful silicon wafer displayed on glittery black surface. — Image Credits: TSMC

However, the transition of production facilities from Taiwan to the U. S.is a lengthy and complex endeavor, requiring years of effort, substantial financial investment, and political backing. We’ve already seen U. S.officials advocating for a balanced production distribution, calling for a ’50-50′ split between American and Taiwanese manufacturing, reflecting a strong desire to mitigate reliance on East Asian production.

For Intel to effectively establish itself as a viable alternative to TSMC, it needs to deliver foundry services that meet high expectations in production capacity, yield rates, and competitive pricing. Achieving this will depend on the success of key impending technologies, such as the 18A and 14A nodes. While Intel’s current leadership emphasizes the growth of their foundry business, substantial improvements are necessary for Intel to position itself as a genuine alternative to TSMC — a sentiment echoed by industry experts like Jim Keller.

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