TSMC to See 50% Revenue Boost from NVIDIA by 2026

Citigroup analysts have forecasted that Taiwan Semiconductor Manufacturing Company (TSMC) will remain the primary foundry partner for both NVIDIA and Intel in the coming years. This prediction is based on the recent collaboration between NVIDIA and Intel, where Intel will produce custom x86 architecture CPUs for NVIDIA. The wafer manufacturing for these CPUs is expected to be primarily handled by TSMC, with the final packaging to be completed at Intel's fabrication plants.

According to Citigroup's analysis, any potential products jointly developed by NVIDIA and Intel will continue to rely on TSMC's technology. The analysts predict that by 2026, TSMC's revenue from NVIDIA will increase by 50%, and from Intel by 20%. This forecast is supported by the fact that TSMC is currently producing six new chips for NVIDIA's next-generation Rubin architecture, which was confirmed by NVIDIA in August.

The analysts also noted that TSMC's leading position in the foundry business remains stable. They expect the company to continue investing in its Arizona fab to serve American clients. The analysts further stated that it would not be surprising if other major U.S. tech companies or existing TSMC clients announce investments in Intel in the near future.

Despite the collaboration, there are persistent market concerns regarding Intel's semiconductor manufacturing business, which has been loss-making. Over the past four quarters, Intel's foundry division generated approximately 180 billion in revenue, accounting for about one-third of the company's total income. However, the division incurred losses of 130 billion, making it the largest drag on the company's profitability.

NVIDIA's CEO has emphasized that the collaboration with Intel is primarily a "product cooperation" and that NVIDIA will continue to rely on TSMC as its primary foundry partner. This reflects the market's skepticism about Intel's foundry business prospects. The market's concerns are further exacerbated by Intel's significant capital expenditure requirements. The company is expected to spend 180 billion on capital expenditures in 2025 and around 150 billion in 2026, leading to a continuous negative free cash flow.