Trump Administration’s Made In America Initiative May Lead Intel to Sell 20% of Foundry Business to TSMC

This is not investment advice. The author has no position in any of the stocks mentioned.

As discussions heat up around a possible collaboration between Intel and TSMC, Taiwanese media outlets report that TSMC is considering acquiring a 20% stake in Intel’s Foundry business. This move could provide a pathway for Intel to utilize TSMC’s fabrication capabilities to produce cutting-edge chips domestically. With Intel’s stock surging by 22.5% in just five days and up 16.7% year-to-date, the momentum aligns with Vice President JD Vance’s remarks in Paris, which emphasized the importance of advanced semiconductor manufacturing in the United States.

Potential TSMC Stake Acquisition in Intel Foundry Services

While rumors abound regarding TSMC’s possible management of Intel’s fabrication facilities, such an operational integration may pose significant challenges. Semiconductor manufacturing processes can vary greatly between companies, complicating potential cooperation. Additionally, any formal alliance between Intel and TSMC will likely face extensive regulatory scrutiny, raising concerns over market monopolization.

The Taiwanese Economic Daily reports that TSMC’s minority investment in Intel is not the only key to this potential deal. Collaboration with major U. S.chip designers like Qualcomm and Broadcom could also play a pivotal role. By placing orders with the new entity, these companies might facilitate a smoother transition into operational status.

The Economic Daily’s report also suggests that the Trump administration’s “Made in America”initiative is backing TSMC’s interest in acquiring a stake in Intel’s Foundry Services (IFS).The investment could take the form of a direct cash infusion or technology support, though specifics remain unconfirmed.

For companies like Broadcom and Qualcomm, investing in IFS could enhance their competitive edge against MediaTek, a formidable rival from Taiwan. Unlike Chinese technology giant Huawei, which is hampered by restrictions on sourcing the most advanced chips, MediaTek is poised to leverage its Asian operations for competitive pricing.

Speculation regarding an Intel spinoff has been persistent since the unexpected resignation of former CEO Patrick Gelsinger last year. The financial strain of maintaining chip manufacturing facilities has prompted Intel to lay off numerous employees and suspend dividend payouts. Despite a 16.7% increase in its stock price this year, Intel’s shares have plummeted by 46% over the past year as the company strives to enhance its product offerings and stabilize production processes with its 18A manufacturing technology.

The 18A process technology will be critical for determining the order volumes that the new business entity may secure. Intel made headlines by being the first to acquire advanced high NA EUV chip manufacturing machines from Dutch firm ASML. However, the company still reported another net loss in its fourth quarter and projected revenues below market expectations.

As developments continue, the semiconductor industry watches closely. The proposed TSMC investment in Intel’s Foundry Services might reshape the landscape, providing new opportunities while navigating complex regulatory challenges.

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