Intel and TSMC in Talks to Form Joint Venture
[BENGALURU] Intel and Taiwan Semiconductor Manufacturing Company (TSMC) have recently discussed a preliminary agreement to form a joint venture to operate the US chipmaker’s factories, according to a report by Information.
TSMC to Take 20% Stake in New Company
TSMC, the world’s largest contract chipmaker, will take a 20% stake in the new company, the report said. 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.
Intel’s Struggles
Intel’s efforts to manufacture chips for external clients have faced challenges as it fell short of providing the level of customer and technical service as rival TSMC, leading to delays and failed tests, former executives have told Reuters. The company reported a 2024 net loss of US$18.8 billion, its first since 1986, driven by large impairments. Shares of the company lost 60% of their value in 2024, compared with an over 23% rise in the benchmark S&P 500 index.
TSMC’s Investment Plans
Last month, TSMC said at a press event that it plans to make a fresh US$100 billion investment in the US that involves building five additional chip facilities.
Background
Intel in March appointed former board member and chip industry veteran Lip-Bu Tan as its CEO to revive its fortunes after it missed out on the artificial intelligence-driven semiconductor boom while plowing billions of US dollars into building out its chip-making business. Reuters reported in March that TSMC had pitched Nvidia, Advanced Micro Devices and Broadcom to take stakes in a joint venture that would operate Intel’s factories, after the US administration requested the Taiwanese chipmaking giant to help turn around the troubled US icon.
Conclusion
The proposed joint venture between Intel and TSMC is a significant development in the ongoing crisis at Intel. The deal could provide a much-needed boost to Intel’s fortunes and help the company regain its position as a leading player in the semiconductor industry.
Frequently Asked Questions
Q: What is the proposed joint venture between Intel and TSMC?
A: The joint venture would operate Intel’s factories and involve TSMC taking a 20% stake in the new company.
Q: What are the motivations behind the proposed joint venture?
A: 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.
Q: What are the challenges facing Intel’s chip-making business?
A: Intel’s efforts to manufacture chips for external clients have faced challenges due to the company’s failure to provide the level of customer and technical service as rival TSMC, leading to delays and failed tests.
Q: What are TSMC’s plans for investment in the US?
A: TSMC plans to make a fresh US$100 billion investment in the US that involves building five additional chip facilities.
