Intel, TSMC Tentatively Agree to Form Chipmaking Joint Venture
Intel’s financial crisis may be over—with support from its biggest rival.
Executives from Intel and Taiwan Semiconductor Manufacturing Co. recently reached a preliminary agreement to form a joint venture to operate Intel’s chipmaking facilities, with TSMC taking a 20% stake in the new company, according to two people involved in some of the discussions.
Intel and other U.S. semiconductor companies will hold the majority of the shares in the proposed JV, which would include at least some of Intel’s existing chip foundries, said the two people. In exchange for the 20% stake, TSMC has discussed sharing some of its chipmaking methods with Intel and training Intel personnel to use them, insteading of funding its stake with capital, one of the people said.
The Takeaway
• Intel and TSMC have reached a preliminary agreement on a chipmaking joint venture
• TSMC may take 20% of the venture in exchange for training Intel to use its methods
• The deal, initiated by the White House, may still meet some resistance within Intel
It isn’t clear how the rest of the new entity would be funded. The deliberations are ongoing and no final agreement has been reached, the two people said. There’s still resistance from some Intel executives concerned that the deal would cause widespread layoffs at the company while subsuming its own chipmaking technology, according to two Intel employees.
The Trump administration initiated the Intel-TSMC talks in an effort to revitalize Intel, said the two people. Trump, who previously accused Taiwan of “stealing” away the U.S. chip industry, is keen to bring advanced manufacturing, including chipmaking, back to the U.S.
Last month, TSMC announced a $100 billion investment to expand its production capacity in the U.S., a commitment CEO C.C. Wei said was mainly driven by customer demand. But President Donald Trump has credited his tariff threat on chip imports from Taiwan as the impetus for TSMC’s investment plan.
The Intel-TSMC deal negotiations took place while TSMC was fending off another problem in Washington: The U.S. Department of Commerce has been probing whether the Taiwanese company violated U.S. export rules by making advanced chips for China’s Huawei Technologies. TSMC, the world’s largest chipmaker, counts Apple and Nvidia as its top two customers. It uses American chipmaking intellectual property—which means it has to comply with U.S. export regulations.
White House and Commerce officials have been pressing TSMC and Intel to strike a deal to resolve the long-running crisis at Intel, one of the most iconic U.S. technology firms. Commerce officials who have facilitated the negotiations support the tentative deal, said the two people who have been involved in some of the talks.
Spokespeople for Intel and TSMC declined to comment. Spokespeople for the White House and Commerce department didn’t immediately respond to a request for comment. Bloomberg previously reported that TSMC is considering operating Intel’s chipmaking factories in the U.S.
The proposed joint venture could also help TSMC effectively put down a major, if struggling, competitor and give the Taiwanese government more bargaining power with the Trump administration, which just levied tariffs on goods other than chips from the island.
Taiwan also faces a persistent threat of a takeover by China, and President Trump has declined to say whether he will defend the island, which Beijing considers a breakaway province.
The deal could improve the manufacturing expertise of Intel’s factories. Founded in 1987 by Chinese American Morris Chang, TSMC was the first company to solely focus on chip manufacturing, steering clear of chip design. That strategy helped it avoid competing with its customers and become the world’s largest chipmaker.
In contrast, Intel hasn’t kept up in advanced chipmaking. The company has struggled to attract enough customers to utilize its manufacturing facilities due to lower production efficiency and higher costs, compared to TSMC.
If TSMC gets involved in Intel’s factory operation, the U.S. company may need to consider significant layoffs of semiconductor engineers, revise its equipment procurement strategy and possibly sell some of its expensive machinery, the two employees said.
As of the end of last year, Intel’s foundry division reported the value of property and plant equipment at $108 billion, according to its financial filings. TSMC’s property, plant, and equipment are valued at $98.7 billion as of the end of last year, according to its latest financial filing. The companies may use different methods of calculating the figures so they may not be an apple-to-apples comparison.
Despite heavy investments in its chipmaking business, Intel reported a net loss of $18.8 billion for 2024, marking its first loss since 1986. The loss was primarily driven by a sluggish PC market and heavy investment in building chipmaking factories and buying equipment, and the company’s shares dropped more than 50% last year.
Intel’s Resistance
There’s still resistance from some Intel executives concerned that the deal with TSMC would irreparably disturb the development of Intel’s own chipmaking technology as well as prompt widespread layoffs at the company, according to the two Intel employees.
One of the most pressing questions surrounding the proposed joint venture has been how exactly Intel and TSMC would work together, given that the companies use different production machine models and materials. If the joint venture primarily uses TSMC’s method, that may force Intel to get rid of most of its equipment and could effectively be seen as a sale of that part of the business to TSMC, according to someone close to the discussions.
If TSMC gets involved in Intel’s factory operation, the U.S. company may need to consider significant layoffs of semiconductor engineers, revise its equipment procurement strategy and possibly sell some of its expensive machinery, the two employees said.
The Taiwanese chipmaker dominates the production of advanced chips globally for smartphones and artificial intelligence servers.
The joint venture discussions sputtered for months because Intel didn’t have a CEO after parting with Pat Gelsinger in December. Last month, Intel found his replacement in Lip-Bu Tan, a former CEO of Cadence Design Systems, which develops software for designing chips.
While Tan was serving on Intel’s board of directors before stepping down from that role last year, he advocated for selling the foundry business, according to two people close to Tan.
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