Although TSMC has committed to invest an additional $100 billion in its own Fab 21 campus in the U.S., a potential joint venture to run Intel's manufacturing capacity is still in the works, according to Reuters, citing four sources. TSMC would reportedly not own more than 50% of the proposed joint venture. A venture that would see leading American fabless chip designers — AMD, Broadcom, Nvidia, and Qualcomm — get stakes in the joint venture, which will be operated by TSMC.
The initiative emerged following a request from President Trump's administration, aiming to bolster Intel while ensuring continued American control. Under the terms of the proposed scheme, Intel will have to spin off its Intel Foundry (IF) division that produces chips for Intel and third-party customers, and then TSMC, the world's largest contract chipmaker, buys less than 50% of IF, leaving the rest to partners. TSMC reportedly initiated discussions with AMD, Broadcom, Nvidia, and Qualcomm, but the talks remain preliminary and sensitive, according to four anonymous sources familiar with these discussions. It is also noteworthy that TSMC has not pitched its main client, Apple, to invest in the JV.
The idea of such a collaboration aligns strategically with President Trump's goal to revive domestic advanced manufacturing, and reviving Intel is one of the administration's priorities. However, it is unclear whether splitting the company and handing its parts to TSMC helps with competition between foundries.
According to Reuters' sources, TSMC approached potential partners about the joint venture prior to its March 3 announcement of plans to invest an additional $100 billion in its U.S. manufacturing capacities, which includes the construction of five new Fab 21 modules over the next several years, building two advanced packaging facilities, and an R&D center. Discussions regarding the joint venture involving Intel's foundry division have continued since then, according to the three sources, with TSMC aiming to secure partnerships with multiple chip design companies.
Technical, operational, and business complexities present significant hurdles for the potential joint venture.
- According to an Intel filing with the SEC, Intel's manufacturing and real estate assets cost around $108 billion, so interested parties will have to invest tens of billions of dollars to get a sizeable stake in Intel Foundry.
- TSMC is unlikely to be interested in owning a 50% stake in a JV that uses its own process technologies and competes against the Taiwan foundry.
- Transferring TSMC's production nodes to Intel's advanced fabs with EUV tools is hard, if possible at all, as Intel and TSMC operate vastly different manufacturing processes, employing distinct equipment configurations and chemical substances at their respective fabs.
- Intel has fabs that can only produce chips using its own process technologies. These fabs — which cost tens of billions of dollars — will continue to serve Intel for a while, but they present little value for outside investors.
- It is unclear how operating a JV aligns with TSMC's own manufacturing operations in the U.S.
The news had immediate market implications. Intel's stock price rose more than 7% in pre-market U.S. trading following reports of this potential partnership, according to Reuters. However, it is unclear whether the aforementioned fabless semiconductor developers are interested in getting into manufacturing. All of them chose to be fabless because they did not want to get into a complex capital-intensive business, and it is unclear what could drive their interest towards putting tens of billions of dollars in a JV considering the fact that they already have pre-booked capacity at TSMC.
