TSMC Proposes Joint Venture to Operate Intel's Factories with U.S. Chip Makers

A logo of Taiwanese chip giant TSMC can be seen in Tainan, Taiwan, Dec. 29, 2022. Reuters-Yonhap

TSMC has approached U.S. chip designers, namely Nvidia, Advanced Micro Devices (AMD), and Broadcom, with a proposal to take stakes in a joint venture that would oversee the operations of Intel's factories, as reported by sources familiar with the discussions.

According to the proposal, TSMC would manage the operations of Intel's foundry division, which is responsible for manufacturing customized chips for its clients. However, TSMC would not exceed a 50 percent ownership in the venture, the sources added. Qualcomm has also been mentioned as a potential participant in these discussions.

These initial talks follow a request from the Trump administration for TSMC, the world's leading contract chipmaker, to assist in revitalizing the struggling U.S. tech giant Intel. This information comes from sources who requested anonymity as the discussions are not publicly disclosed.

This proposal to limit TSMC's stake to no more than 50 percent and its outreach to potential partners is being reported for the first time.

Any final agreement would require approval from the U.S. government, which is keen to prevent Intel and its foundry division from being entirely foreign-owned, sources indicated.

As the future of Intel hangs in the balance, it is notable that the company's shares have plummeted by more than 50 percent over the past year.

Intel recorded a significant net loss of $18.8 billion for 2024, marking its first loss since 1986, largely due to substantial impairments. The foundry division's property and plant equipment was valued at $108 billion as of December 31, as stated in a company filing.

President Trump is reportedly eager to restore Intel's position as part of his broader agenda to boost advanced manufacturing in the United States.

TSMC's joint venture proposal was made prior to the company's announcement with Trump on March 3 regarding a new $100 billion investment in the U.S., which includes plans to build five additional chip manufacturing facilities over the coming years.

Discussions regarding the joint venture have progressed, with TSMC expressing interest in partnering with multiple chip designers.

While various companies have shown interest in acquiring parts of Intel, reports indicate that Intel has dismissed suggestions to separate its chip design unit from its foundry business. Qualcomm has previously withdrawn from negotiations to acquire Intel, according to sources.

Some Intel board members have endorsed a potential deal and have held discussions with TSMC, while certain executives remain opposed, as noted by two sources.

Intel's foundry division was integral to the strategies of former CEO Pat Gelsinger, who was removed from his position in December, leading to the appointment of two interim co-CEOs who have since shelved the upcoming AI chip plans.

Any collaboration between competitive companies like TSMC and Intel would encounter significant hurdles, as their manufacturing processes, chemicals, and tooling setups greatly differ.

Intel previously engaged in manufacturing partnerships with Taiwan's UMC and Israel's Tower Semiconductor, which may provide a framework for collaboration. However, it remains uncertain how such a partnership would address the protection of manufacturing secrets.

TSMC seeks potential investors in the joint venture who are also customers of Intel's advanced manufacturing services.

Recent reports indicate that both Nvidia and Broadcom are currently testing manufacturing processes with Intel, utilizing Intel's latest production capabilities, referred to as 18A. AMD is also assessing whether Intel's 18A manufacturing process can meet its needs.

However, the 18A technology has become a point of contention in discussions between Intel and TSMC. During conversations in February, Intel informed TSMC that its advanced 18A manufacturing technology surpassed TSMC's 2-nanometer process.

TSMC, Intel, Nvidia