The Semiconductor Big Dogs Are Eyeing Intel’s Foundry Business, Sending Shares Higher

Shares of Intel (NASDAQ:INTC) are up 4% heading into midday trading Wednesday on reports that the world’s leading contract chipmaker, Taiwan Semiconductor Manufacturing (NYSE:TSM), has proposed a groundbreaking joint venture with U.S. chip giants Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD), and Broadcom (NASDAQ:AVGO) to buy and operate Intel’s struggling foundry business. 

This pitch also reportedly includes Qualcomm (NASDAQ:QCOM) as a potential partner and comes amid Intel’s financial woes while also aligning with President Trump’s push to bolster American manufacturing. 

With TSM capping its ownership at 50% to maintain U.S. control, the deal could reshape the semiconductor landscape, though it might not be a smooth process. 

Staunching the flow of red ink

Intel’s foundry division, launched under former CEO Pat Gelsinger’s IDM 2.0 vision in 2021, aimed to rival TSM by making chips for external customers. Yet, it’s been a money pit, posting a $7 billion operating loss in 2023 and another $13.4 billion in 2024, which heavily contributed to Intel’s $18.8 billion net loss last year — its first since 1986. 

INTC stock tanked over 55% in the past year, reflecting delays in its 18A process and lost market share to AMD and Nvidia. but the Trump administration sees Intel as a linchpin for U.S. chip self-reliance, prompting calls for the global foundry pure-play to intervene. Taiwan Semiconductor’s $100 billion U.S. investment announcement on March 3 alongside Trump set the stage for this JV pitch.

Under the plan, TSM would manage Intel’s foundry operations, whose assets are valued at $108 billion, while owning no more than 50% to ensure American majority ownership. Nvidia, AMD, and Broadcom, all fabless chip designers that are big customers of TSM, would take stakes, potentially joined by Qualcomm. This structure leverages the foundry leader’s operational expertise and 67% industry market share, while aligning with U.S. CHIPS Act subsidies requiring domestic control.

The JV could secure orders from these partners, who are already testing Intel’s 18A process.

Groundbreaking, but risky

For Taiwan Semiconductor Manufacturing, the proposal diversifies its U.S. footprint beyond its $65 billion Arizona fabs while mitigating the geopolitical risks tied to Taiwan. Nvidia, AMD, and Broadcom would gain manufacturing influence, potentially reducing reliance on TSM’s Taiwanese plants that are at risk amid growing China trade tensions. 

Intel would also benefit from TSM’s efficiency and customer base, which could possibly stabilize its foundry with contracts worth hundreds of millions. 

Challenges abound, however. Intel’s 18A manufacturing process is different from TSM’s 2 nanometer (nm) process. It could be a contentious relationship  as Intel claimed superiority in talks last month. Integrating trade secrets is also tricky, though past Intel partnerships with United Microelectronics (NYSE:UMC) and Tower Semiconductor (NASDAQ:TSEM) offer a possible path forward. 

There is also competition. Samsung’s foundry push in 2 nm production could lose ground if this JV succeeds, but how committed are Nvidia and AMD in propping up a rival like Intel long-term? 

Financially, Intel’s losses might deter partners wary of a business that bleeds barrels of red ink.  There are also regulatory hurdles to clear, including U.S. antitrust laws and export controls, adding to the uncertainty surrounding the proposal.

Key takeaway

Taiwan Semiconductor’s pitch is a daring bid to revive Intel’s foundry as it blends American chip innovation with Taiwanese prowess. If successful, it could secure U.S. chipmaking and reward investors with a revitalized Intel. Yet execution risks and strategic misalignments could stall it. For now, it’s a tantalizing “what if,” but a potential game-changer if it actually comes together.

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