Possible acquisition of Intel's foundry business TSMC is in joint venture talks with Nvidia, Broadcom, Qualcomm and AMD

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According to Reuters reports, TSMC has offered Nvidia, AMD, Qualcomm, and Broadcom a stake in a possible joint venture for Intel's foundry division. Accordingly, the semiconductor manufacturer could envision taking up to a 50 percent stake in Intel's manufacturing facilities if other companies join in.

According to insiders, the world's largest contract manufacturer of semiconductors, TSMC, has contacted leading fabless chip developers from the USA to gain them as partners for a planned joint venture to acquire Intel's foundry division. As reported by Reuters, citing unnamed internal sources, AMD, Nvidia, and Broadcom were primarily considered. Qualcomm was also reportedly among the potential investors.

According to this report, TSMC could envision taking over the operational processes of Intel's foundry business. However, the Taiwanese contract manufacturer itself would like to hold no more than 50 percent of the business stake.

Political pressure to save Intel

The negotiations are closely related to the political efforts of the US government, Reuters speculates. President Trump is said to have urged TSMC to participate in the restructuring of Intel to strengthen US semiconductor manufacturing. However, a complete sale to foreign investors is not desired, and any potential acquisition would need to be approved by the government. Therefore, TSMC is seeking suitable joint venture partners among well-known chip companies headquartered in the USA.

Intel's economic situation is strained. In 2024, the company recorded a net loss of $18.8 billion, marking its first negative annual result since 1986. The foundry division reports an asset value of $108 billion. Despite these challenges, Intel's stock price rose by 6 percent following news of the negotiations, while Nvidia, AMD, and Broadcom also saw gains.

Manufacturing processes in competition

A collaboration between Intel and TSMC would be technologically challenging. Both companies use different technologies and materials for their manufacturing processes. Integrating the existing Intel fabs into TSMC's existing production lines would therefore likely be difficult and involve enormous technological effort and costs.

Moreover, there have been few comparable partnerships in the past — for instance, with Taiwan's UMC or Tower Semiconductor in Israel. It is also unclear how intellectual property and manufacturing secrets would be handled. In Taiwan, there is little enthusiasm in this regard: National media fears that joining Intel could lead to a sell-off of their technological advantage if it forces a technology transfer to the USA.

A key aspect of the negotiations is Intel's advanced 18A manufacturing process, which competes with TSMC's 2-nm technology. Nvidia and Broadcom are already testing Intel's 18A process, while AMD is considering potential use, as reported by Reuters earlier this March. However, there is disagreement over the technological superiority of the respective processes, leading to tensions in the discussions. According to insider information, initial tests for Broadcom were reportedly unsatisfactory.

Within Intel, there is disagreement

According to Reuters, TSMC intends for potential joint venture partners to also commit as customers for Intel's manufacturing capacities. This would ensure the utilization of the facilities. Nvidia, AMD, and Broadcom could secure long-term production capacities through a stake in the foundry division and reduce their direct dependence on TSMC.

While according to Reuters, some Intel managers supported the talks with TSMC, there is internal resistance from other quarters: the board of directors is reportedly open to a possible deal, while some executives oppose collaboration with the Taiwanese competitor.

Intel had big plans for its foundry business but has so far found only a few notable customers for semiconductor contract manufacturing, including AWS and the U.S. Department of Defense. The dismissal of former CEO Pat Gelsinger in December 2024 has further intensified strategic uncertainty. With the appointment of Lip-Bu Tan as the new Intel CEO, the company is now expected to get back on track.

As a long-time CEO of Cadence Design Systems, Tan brings extensive experience in semiconductor development and manufacturing as a manager. During his time on Intel's board, Tan was considered one of the sharpest critics of Intel's slow transformation and the internal issues that hampered the company's manufacturing and innovation capabilities under his predecessors Brian Krzanich, Roger Swan, and Pat Gelsinger. His appointment as CEO, which surprised some market observers, is likely to meet the desire of numerous forces within the company to pursue a clear line in semiconductor development again. (sg)