TSMC Proposes Joint Venture with U.S. Chip Designers to Operate Intel's Foundries

A logo of Taiwanese chip giant TSMC can be seen in Tainan, Taiwan, on December 29, 2022.

According to sources familiar with the matter, TSMC has approached prominent U.S. chip manufacturers Nvidia, Advanced Micro Devices (AMD), and Broadcom with a proposal to take stakes in a joint venture that would manage Intel's manufacturing facilities.

Per the proposal, TSMC would oversee the operations of Intel's foundry division, which is responsible for producing chips tailored to specific customer needs. However, TSMC would maintain a minority stake of no more than 50 percent in this joint venture.

Additionally, Qualcomm has also been approached by TSMC, as confirmed by multiple sources. The discussions are in the preliminary stages and came after a request from the administration of U.S. President Donald Trump for TSMC's assistance in revitalizing Intel, a major American industrial name.

The details regarding TSMC's plan, which involves keeping its stake below 50 percent and its discussions with potential business partners, are being disclosed for the first time. It is crucial to note that any final agreement's value, at this point, remains unclear and would require approval from the Trump administration to ensure that Intel's foundry division does not fall under full foreign ownership.

Intel, along with TSMC, Nvidia, AMD, and Qualcomm, has not provided comments regarding these discussions. The White House and Broadcom have also remained silent on the matter.

The stakes are high for Intel, whose stock has lost over half of its value in the past year. The company reported a significant net loss of $18.8 billion for 2024—its first loss since 1986—primarily due to considerable impairments. As per Intel's filings, the foundry division's property and plant equipment had a book value of $108 billion as of December 31.

Sources indicate that President Trump is eager to improve Intel's situation as part of a broader initiative to enhance advanced manufacturing in the United States. TSMC's proposal for a joint venture was made shortly before the company announced, in coordination with Trump, its plan to invest $100 billion in the U.S., which includes building five new chip facilities over the upcoming years.

Further discussions about the joint venture have continued, with TSMC looking to partner with more than one chip designer. While several companies showed interest in acquiring parts of Intel, two sources revealed that Intel has declined discussions about separating its chip design house from its foundry division.

Earlier communications with Qualcomm suggested a potential acquisition of some parts of Intel, but Qualcomm has since decided to withdraw from these discussions. Despite interest from Intel's board members in exploring a deal, complications exist as some executives strongly oppose it.

Intel's foundry division played a significant role in former CEO Pat Gelsinger's strategy for revitalization at the company. However, Gelsinger was dismissed from his position in December, with two interim co-CEOs taking charge and subsequently halting plans for a new AI chip.

Any collaboration between TSMC and Intel faces significant challenges and would be complex. Both companies utilize different manufacturing processes, chemicals, and tools in their factories. Intel has previously collaborated with Taiwan's UMC and Israel's Tower Semiconductor, providing some precedent for a potential partnership, but how they would handle trade secrets related to manufacturing remains uncertain.

According to sources, TSMC aims to involve potential investors in the joint venture who are also customers of Intel's advanced manufacturing.

Reports suggest that Nvidia and Broadcom are currently running manufacturing tests at Intel, evaluating the company’s latest production techniques, known as 18A. AMD is also considering if Intel's 18A manufacturing process is appropriate for its needs.

However, disagreements have emerged regarding the 18A technology during negotiations between Intel and TSMC. Intel executives asserted that their 18A manufacturing technology exceeds TSMC's 2-nanometer process during discussions in February.

TSMC, Intel, Partnership