Intel shares are on track for their strongest weekly gain on record, based on Bloomberg trading data dating back to 1982. Investor enthusiasm surged after Vice President JD Vance, speaking at an AI summit in Paris on Tuesday, noted the Trump administration would boost domestic chip production. Momentum continued on Wednesday after a report from Robert W. Baird analysts suggested that the Trump team is working to broker a joint venture between Intel and TSMC.
On Tuesday, at the AI summit in Paris, VP Vance told the audience: “The Trump administration will ensure that the most powerful AI systems are built in the U.S. with American-designed and manufactured chips.”
One day later, that was followed by a note via Robert W. Baird analysts claiming that the Trump team was pushing Intel and TSMC to form a joint chip production venture.
“There are discussions from the Asia supply chain that the U.S. government will get involved in potentially the following: TSMC would send engineers to Intel’s 3nm/2nm fab, applying the company’s know-how to ensure that the fab and subsequent manufacturing projects from Intel become viable,” Baird’s Tristan Gerra told clients.
Gerra said, “The fab could be spun off into a new entity jointly owned by TSMC and Intel, and run by TSMC. The new entity would receive U.S. Chip Act funding.”
“While there is no confirmation and potential completion of this project could be lengthy, we think this move makes sense,” she noted.
On a separate note, Goldman’s Bruce Lu, Toshiya Hari, and others provided clients on Friday with a closer look at the JV rumors involving Intel and TSMC:
Media has speculated that TSMC and Intel (covered by Toshiya Hari) may be forming a joint venture to enhance U.S. chip manufacturing capabilities or that Intel may be considering spinning off its semiconductor fabrication unit to create a collaborative venture with TSMC with TSMC providing technical expertise and engineers to support advanced chip production at Intel’s fabs.
At a glance: Fundamentally, the strategic merit for a potential JV seems unclear as TSMC and Intel operate under different business models and different tool sets which would likely require extra investment e.g. for purchasing/retiring equipment. For Intel and TSMC, even when looking at comparable technology nodes, some processes and equipment used are different. Also, Intel’s equipment is generally for older process nodes, which is not the primary area of focus for capacity expansion for TSMC (i.e. TSMC’s spending currently is mostly for its N2 expansion).
Additionally, TSMC’s business strategy has been to remain independent and avoid entering into JVs that could compromise its neutral status with other clients. More importantly, TSMC’s advanced nodes technology is its own property with proprietary processes, and is a key competitive advantage. Sharing this technology with a direct competitor like Intel could undermine its market position. Additionally, TSMC has historically been very cautious about sharing its intellectual property with other companies, especially with those in direct competition within the semiconductor space. Therefore, a technology transfer agreement between TSMC and Intel would seem uncharacteristic of TSMC’s strategy.
Another outstanding issue is potential anti-trust implications of any TSMC/Intel partnership/JV given the dominant market positions of the two companies. However, to note, Intel and UMC announced a foundry collaboration in January 2024, the two companies will jointly develop a 12nm process platform. UMC will be leveraging Intel’s existing equipment in Intel’s existing fabs, with mass production timeline expected to begin in 2027 (see also: Intel/UMC new foundry collaboration; we view it as a positive strategic move for both companies, 26 January 2024).
The JV rumors have been more than enough to spark buying panic in beaten-down Intel shares.
There’s a tweet for that.
Intel becoming a meme stonk?
— zerohedge (@zerohedge) February 13, 2025
Intel may log one of the best weeks on record if gains hold through Friday’s close.
Here’s Tom’s Hardware’s take on the rumors:
Ongoing geopolitical turmoil, coupled with Intel’s financial and execution struggles, have generated various rumors surrounding the blue giant. In this case, significant technological and business hurdles — ranging from differences in tooling process recipes at Intel and TSMC to TSMC’s lack of incentive to aid a competitor — cast doubt on the feasibility of such a partnership.
. . .
Tyler Durden
Fri, 02/14/2025 – 07:45
