Source: Wall Street Journal.
Author: Zhao Yuhe
According to reports, the trade is led by the White House, in the proposed joint venture, Intel and other USA semiconductor companies will hold a majority stake, which will include some of Intel's existing chip foundries. Taiwan Semiconductor will hold a 20% stake but will not contribute cash; instead, it will Share some chip manufacturing processes with Intel and train its employees to master these processes. However, some Intel executives oppose this, believing that if the joint venture primarily adopts Taiwan Semiconductor's processing methods, Intel could be forced to eliminate most of its existing equipment, which is almost equivalent to selling its business to Taiwan Semiconductor.
According to a report by The Information, two informed sources involved in some discussions revealed that Intel and Taiwan Semiconductor executives have recently reached a preliminary agreement to establish a joint venture to operate Intel's chip manufacturing facilities, with Taiwan Semiconductor holding 20% of the shares in the joint venture. Analysts believe that with the support of its biggest competitor Taiwan Semiconductor, Intel's financial crisis may soon come to an end.
The two informed sources told the media that, in the proposed joint venture, Intel and other USA semiconductor companies would hold a majority share, including some of Intel's existing foundries. As a condition for obtaining the 20% stake, Taiwan Semiconductor will not invest cash but will share some chip manufacturing processes with Intel and train its employees to master these processes.
It is still unclear how the remaining part of the new joint venture will be financed. The informed sources said that relevant negotiations are still ongoing and a final agreement has yet to be reached. There are still dissenting voices within Intel, with some senior executives concerned that this deal could lead to large-scale layoffs and weaken Intel's own chip manufacturing technology.
As a result of this news, amid a significant decline in the USA large cap market due to Trump's tariff policy on Thursday, Intel's stock price rose 2.05%, closing at $22.43.
These two individuals told the media that the collaboration negotiations between Intel and Taiwan Semiconductor are led by the Trump administration, aiming to revitalize Intel.
Last month, Taiwan Semiconductor announced it will invest 100 billion USD in the USA to expand capacity. Taiwan Semiconductor's CEO, Wei Zhejia, stated that this decision is primarily driven by customer demand.
According to reports, White House and USA Department of Commerce officials have been pushing for Taiwan Semiconductor to reach an agreement with Intel to address Intel's long-standing crisis. Two individuals involved in the negotiations told the media that the USA Department of Commerce also supports this initial agreement.
Can Intel be revived?
Analysts believe that this collaboration is expected to enhance Intel's manufacturing capability. Taiwan Semiconductor is the first company to focus solely on chip manufacturing without engaging in chip design; this strategy has helped it avoid competition with clients and develop into the world's largest chip foundry.
In contrast, Intel has显著落后 in the field of advanced chip manufacturing. Due to low production efficiency and high costs, the company finds it challenging to attract enough clients to use its manufacturing services.
According to Intel's Earnings Reports, as of the end of last year, the value of its foundry's factories and equipment assets was 108 billion USD; Taiwan Semiconductor's similar assets were worth 98.7 billion USD. However, the two companies may use different accounting methods, making the data not directly comparable.
Despite Intel's massive investment in chip manufacturing, the company reported a net loss of 18.8 billion USD in 2024, marking its first loss since 1986. The primary reasons are a sluggish PC market and heavy capital expenditures for building factories and acquiring equipment. The company's stock price had already declined by over 50% last year.
There are dissenting voices within Intel: equivalent to a disguised sale.
According to two Intel employees who disclosed information to the media, there are still executives within the company who oppose collaboration with Taiwan Semiconductor, fearing it could permanently damage the development of Intel's own chip manufacturing technology and lead to widespread layoffs.
One of the biggest questions surrounding this joint venture is how Intel and Taiwan Semiconductor will collaborate, as the production equipment and materials used by the two companies are completely different. Insiders told the media that if the joint venture primarily adopts Taiwan Semiconductor's process methods, Intel may be forced to eliminate a large portion of its existing equipment, which is almost equivalent to selling its business to Taiwan Semiconductor.
It has been reported that the negotiations between the two parties have been delayed for several months because Intel has had no successor since the departure of former CEO Pat Gelsinger in December of last year. It was not until last month that the company appointed former Cadence Design Systems CEO Chen Lifeng as the new CEO.
According to two individuals familiar with Chen Lifeng, he advocated for the sale of Intel's foundry business before he resigned from his position as a Director at Intel last year.
Editor/Jeffy
