Intel and TSMC almost agree to work together

Intel shares jumped after The Information reported that the company had reached a preliminary agreement with Taiwanese contract semiconductor maker TSMC to form a joint venture. The parties reached a deal that could change the balance of power in the semiconductor industry and provide a lifeline for the struggling U.S. chipmaker.

Image Source: Intel

According to Bloomberg, the joint venture will manage Intel’s manufacturing facilities, with the American side retaining a controlling stake. The structure will include at least some of Intel’s factories in the United States. It is noted that the positive news led to an 8.7% increase in Intel shares on Thursday, recouping the previous decline of more than 5% on the same day.

The idea of ​​a joint venture was discussed by the companies as early as February at the request of the Donald Trump administration and was seen as a way to stabilize the finances of Intel, which in recent months has been forced to cut thousands of jobs and curb plans to expand production.

If the project goes ahead, it would be the first major achievement for Intel’s new CEO Lip-Bu Tan, who also promised at the Intel Vision 2025 conference in Las Vegas to focus on core areas and divest non-core assets. As part of the joint venture talks, TSMC, in turn, discussed sharing some of its manufacturing technology with Intel in exchange for a 20% stake in the new company.

However, some Intel executives fear that the deal will push the company’s existing chip manufacturing technologies into the background and lead to new layoffs. The company also believes that Intel is capable of getting out of the crisis on its own. Intel officials have not yet commented on the situation. TSMC also declined to comment.