Intel Shares Surge on TSMC Foundry Joint Venture Proposal

Intel's stock surged over 7% in premarket trading on Wednesday, March 12, 2025, following reports that Taiwan Semiconductor Manufacturing Company (TSMC) has pitched a joint venture to operate Intel's foundries. The proposal, which involves TSMC taking a stake of no more than 50% in the venture, aims to rejuvenate Intel's struggling foundry division while ensuring that the division is not fully foreign-owned. This move comes as Intel faces significant financial challenges, including a 7% year-over-year decrease in sales in the fourth quarter of 2024 and a net loss of approximately $126 million.

The joint venture proposal is part of a broader strategy by the Trump administration to bolster American advanced manufacturing. TSMC, the world's leading contract chipmaker, has been nudged by the administration to assist in turning around Intel, a struggling U.S. tech icon. The administration's approval would be crucial, as it aims to prevent full foreign ownership of Intel's foundry division. Any final deal would need to address national security concerns and ensure that sensitive technology and intellectual property are protected.

The potential partnership between TSMC and Intel is not without its hurdles. The two companies have historically been rivals, and their manufacturing processes differ significantly. Previous collaborations with Taiwan's UMC and Israel's Tower Semiconductor offer some precedent, but the integration of trade secrets remains a complex issue. TSMC is also looking for potential investors in the joint venture to become Intel's advanced manufacturing customers. Nvidia and Broadcom are already testing Intel's cutting-edge 18A production techniques, while AMD is evaluating its suitability. However, the 18A technology has been a sticking point in negotiations. Intel executives have claimed that their 18A process outperforms TSMC's 2-nanometer technology, adding another layer of complexity to the talks.

The outcome of these discussions could have far-reaching implications for the future of chipmaking in the United States. Other semiconductor companies, such as Nvidia, AMD, Broadcom, and Qualcomm, are already involved in the discussions and could benefit from the technological advancements and market dynamics resulting from the joint venture. The joint venture could provide Intel with the operational expertise and financial backing needed to turn around its foundry division, potentially regaining some of its lost market share. However, it could also signal a partial loss of control over a critical part of its business.

The joint venture proposal comes as TSMC significantly expands its investments in the United States. In 2025, TSMC announced an additional $100 billion investment in the US, bringing its total commitment to $165 billion. This expansion includes plans for three new fabrication plants, two advanced packaging facilities, and a major R&D center, marking it as one of the largest foreign direct investments in US history. Managing Intel's foundries could solidify TSMC's position as the global leader in semiconductor manufacturing while also expanding its footprint in the US. However, it risks overextending its resources, given its already significant investments in the US.

The joint venture talks are at an early stage, and the details of the plan for TSMC to take no more than a 50% stake and its overtures to potential partners are being reported for the first time. Intel's board members have backed a deal and held negotiations with TSMC, while some executives are firmly opposed, indicating internal resistance to the potential loss of control. The Trump administration has reportedly nudged TSMC to help rejuvenate Intel, indicating a strategic interest in maintaining US control over advanced manufacturing capabilities.

In conclusion, the proposed joint venture between TSMC and Intel has the potential to significantly impact the competitive landscape of the semiconductor industry. It could lead to shifts in market share, drive technological advancements, and influence the strategic positioning of key players in the industry. However, the success of the joint venture will depend on overcoming significant challenges and obtaining necessary approvals. The US government's approval process and national security concerns are likely to shape the structure of the joint venture by limiting TSMC's stake and requiring significant adjustments to address security concerns. The outcome of the negotiations will depend on the ability of TSMC and Intel to meet these requirements and gain the necessary approval from the US government.