Taiwan Semiconductor Could Be The Lifeline Intel Needs As Rumors Swirl Of A US-Backed Joint Venture

Intel Corp. INTC may be facing a turning point as rumors suggest the U.S. government could intervene to push a joint venture between the struggling chipmaker and Taiwan Semiconductor Manufacturing Co. TSM.

What Happened: According to Baird analyst Tristan Gerra, supply chain sources indicate that the U.S. government is considering forcing Intel into a joint venture with TSMC to bolster domestic chip manufacturing, reported Investing.com.

The deal would see TSMC deploy engineers to Intel's advanced 3nm and 2nm fabrication plants, leveraging its expertise to help ensure the success of Intel's foundry business.

Under the rumored arrangement, the fab unit could be spun off into a new entity co-owned by Intel and TSMC, with the latter overseeing operations.

The new company could also qualify for funding under the U.S. CHIPS Act, aimed at revitalizing the U.S. semiconductor industry.

"While there is no confirmation and potential completion of this project could be lengthy, we think this move makes sense…" Gerra noted.

Why It Matters: Intel, once the undisputed leader in semiconductor manufacturing, has faced challenges and lost ground to rivals like Nvidia Corp. NVDA and Broadcom Inc. AVGO.

Its stock plunged 60% last year as it fell behind in AI chip advancements. The latest earnings report marked a third straight quarter of declining revenue, with a weak outlook ahead.

Leadership changes are also underway after CEO Pat Gelsinger’s departure in December.

Meanwhile, on Tuesday, U.S. Vice President JD Vance spoke at the Paris AI summit about safeguarding American technologies from foreign adversaries.

The U.S. and U.K. also declined to sign a global AI safety declaration at the AI Action Summit in Paris. Their decision set them apart from nearly 60 nations, including China, India, and Germany.

Price Action: Intel’s stock rose 0.22% in after-hours trading to reach $22.53. Earlier on Wednesday, it closed at $22.48, marking a 7.20% gain, according to Benzinga Pro data. TSMC’s stock edged up 0.30% in after-hours trading, reaching $207. During the regular hours on Wednesday, it closed at $206.38, down 1.13%.

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