Intel and TSMC have tentatively agreed to create a joint venture to run Intel’s US chip factories, multiple reports show. Under the deal, TSMC will get a 20% stake without paying cash—instead offering its manufacturing expertise and staff training.
Intel keeps 80% ownership while potentially bringing in other US chip companies as smaller partners.
“The White House and Commerce department officials have been pressing TSMC and Intel to strike a deal to resolve the long-running crisis at Intel,” an insider told The Information.
This comes after Intel’s brutal 2024: an $18.8 billion loss (its first since 1986), stock price dropping 60%, and continued failure to match TSMC’s advanced chip-making abilities. Once the undisputed chip king, Intel’s joint strategy of designing and manufacturing chips has backfired as specialized competitors pulled ahead.
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Former Intel executives revealed to Reuters that the company’s foundry business—making chips for other companies—has disappointed customers with “delays and failed tests,” lacking TSMC’s service quality.
In March, Intel hired chip veteran Lip-Bu Tan as CEO. He quickly announced plans to shed non-core assets while focusing on AI and “Software 2.0.” Tan aims to hire quality engineers and potentially launch custom semiconductor services.
For TSMC, this deal creates a buffer against possible US tariffs, shares investment risks, and aligns with its existing US expansion plans. Last month, TSMC announced plans to make a fresh $100 billion investment in the US involving five additional chip facilities.
President Trump supports the arrangement but wants to ensure Intel isn’t fully foreign-owned. TSMC is reportedly keeping its stake under 50% to ensure regulatory approval under the Trump administration.
Industry analyst Ming-Chi Kuo cautions that TSMC would need significant management control to truly fix Intel’s manufacturing problems. Other experts worry about technology leakage from TSMC to Intel.
Market response shows investor optimism for Intel, whose shares rose 2% on the news, while TSMC dropped nearly 8% amid broader tariff concerns.
Intel has already delayed its $28 billion Ohio factory project by five years, announced in February to “align the start of production of our fabs with the needs of our business and broader market demand,” according to Intel Foundry Manufacturing’s general manager.
Both companies have declined official comment, suggesting negotiations continue. For consumers, this partnership represents a significant shift in the US semiconductor manufacturing landscape.
Frequently Asked Questions
Intel and TSMC have tentatively agreed to form a joint venture to operate Intel’s chip fabrication plants in the United States. TSMC will take a 20% stake in this venture, not by paying cash, but by contributing its manufacturing expertise and providing training to Intel staff. Intel will maintain 80% ownership, with potential for other US semiconductor companies to join as minority stakeholders. The deal is still in preliminary stages and hasn’t been officially confirmed by either company.
Intel has been struggling with significant challenges recently, including falling behind in advanced chip manufacturing, losing market share, and reporting an $18.8 billion loss in 2024 (its first since 1986). The company’s strategy of both designing and manufacturing chips has put it at a disadvantage against specialized competitors. By partnering with TSMC, which has superior manufacturing capabilities, Intel hopes to improve its production yields and efficiency, particularly for advanced process nodes. This collaboration could potentially help Intel regain competitiveness in the semiconductor market.
For TSMC, this partnership offers several strategic benefits. It could provide protection against potential future tariffs on chips imported from Southeast Asia. It also aligns with TSMC’s existing plans to expand in the US (they recently announced a $100 billion investment plan). Additionally, the joint venture allows TSMC to share the risks and costs associated with US-based manufacturing. While helping a competitor might seem counterintuitive, TSMC is making a calculated business decision that balances short-term competitive concerns against long-term strategic positioning in the US market.
Yes, the US government has played a significant role in facilitating this potential partnership. According to reports, “The White House and Commerce department officials have been pressing TSMC and Intel to strike a deal to resolve the long-running crisis at Intel.” President Trump supports the arrangement but wants to ensure Intel remains majority American-owned. This government involvement reflects broader concerns about strengthening domestic semiconductor manufacturing capabilities and reducing reliance on overseas production for national security reasons.
The joint venture faces several potential challenges. Industry analyst Ming-Chi Kuo has cautioned that TSMC would need significant management control to truly fix Intel’s manufacturing problems. There are also concerns about technology leakage from TSMC to Intel. Additionally, merging the operations and cultures of two large companies presents significant integration hurdles. The success of the venture will depend on clear operational frameworks, effective knowledge transfer, and the ability to rebuild customer trust in Intel’s foundry services after past failures.
This joint venture could significantly impact the semiconductor industry by strengthening Intel’s position as a foundry for external clients and potentially creating a stronger alternative to TSMC and Samsung. For the broader market, it could help diversify semiconductor supply chains and reduce vulnerability to disruptions. The collaboration might also accelerate technological advancements in US-based chip manufacturing. For consumers, a more competitive and resilient semiconductor industry could eventually lead to more stable supply and potentially better products, though any direct consumer benefits would likely take time to materialize.
