This is not investment advice. The author does not hold any shares in the stocks mentioned.
According to JPMorgan, the impact of Intel’s re-entry into the foundry business poses minimal risks to Taiwan Semiconductor Manufacturing Company (TSMC).Recent developments indicate that the Trump administration is considering investing in Intel, which reignites interest in the company’s foundry capabilities. JPMorgan suggests that a revitalized Intel foundry could actually favor TSMC by reducing scrutiny on the latter’s dominant role in the global contract chip manufacturing market. The bank posits that Intel should prioritize older manufacturing nodes to establish a solid foundation and instill confidence in potential clients like NVIDIA and Apple, thereby ensuring a consistent flow of orders.
Intel’s Focus on Older Manufacturing Processes Essential for Foundry Recovery, Says JPMorgan
Echoing sentiments from various analysts on Wall Street, JPMorgan argues that Intel’s challenges extend beyond mere capital injection issues. The bank points out that TSMC’s stock has remained largely unaffected by prior allegations of monopolistic power in leading-edge chip production since such claims could prompt government investigations and regulatory actions.
As a result, the analysts conclude that Intel’s entry into the foundry sector could inadvertently shield TSMC from monopoly allegations. They have outlined a strategic approach for Intel to rejuvenate its foundry operation, emphasizing the necessity for the company to execute flawlessly across a range of manufacturing processes. This strategic execution is vital for winning customer confidence, particularly among key players like NVIDIA and Apple.
However, JPMorgan’s analysis raises concerns that Intel’s own product lines may hinder its ability to build trust within the foundry sector. The bank believes that instead of relying on capital infusions, Intel should focus on streamlining its cash flow mechanisms to address its financial challenges effectively. Currently, Intel’s revenue generated from its product division is insufficient to support its foundry operations.
For the fiscal year 2024, Intel reported a negative free cash flow of $15.7 billion, showing a slight recovery from the previous period. Current figures indicate a trailing twelve-month (TTM) free cash flow of negative $10.9 billion as noted by Yahoo Finance, although quarterly assessments have shown notable improvements.
Notably, while Intel faced a negative cash flow of $2.4 billion in Q2 2024, this was reduced to $1.5 billion under the leadership of CEO Lip-Bu Tan. A significant contributor to this cash flow drain was the company’s investments in property and equipment, which incurred a $3.6 billion outflow, reflecting a decrease from last year’s Q2 expenditures of $5.7 billion.
JPMorgan analysts suggest that given Intel’s longstanding focus on product development, transitioning to a customer-centric and cost-efficient foundry model may prove challenging. They advocate for Intel to concentrate on outdated manufacturing technologies, such as the 5-nanometer and 3-nanometer processes, to facilitate the establishment of its foundry business without raising competitive concerns among its customers.
Intel’s entry into foundry is actually a benefit for TSMC – JPMorgan. The “revival” of Intel’s foundry business as a potential threat to TSMC is likely overstated by the market. On August 21, JPMorgan’s Technology and Telecoms team said in its latest report that Intel Foundry’s… pic.twitter.com/B7k6eNBR2u
— Jukan (@Jukanlosreve) August 21, 2025
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