The U.S. government is reportedly pushing for a joint venture between Intel and TSMC, but semiconductor industry experts warn that this would be the worst option for TSMC, posing greater risks than tariffs. TSMC could face the risk of technology leakage, which may jeopardize its leading advantage in advanced processes.
(Background: OpenAI’s first self-developed AI chip is expected to complete design and be trial-produced by TSMC this year, potentially countering NVIDIA’s dominance.)
(Additional context: Morgan Stanley warns that a tariff war could lead to a 20% plunge in tech stocks like TSMC, advising investors to take profits.)
According to a report by Baird, an international financial services provider, the U.S. government may be promoting a plan for Intel and TSMC to form a joint venture. The report indicates that TSMC will send engineers to Intel’s 3nm/2nm wafer fabrication facility to provide expertise, ensuring that both the facility and Intel’s subsequent production plans can be implemented.
At the same time, the facility “could be split into a new entity jointly owned by TSMC and Intel, with TSMC responsible for its operations,” the report states, adding that this entity would be eligible for funding under the U.S. CHIPS Act.
Is the U.S. government pushing for a TSMC-Intel joint venture?
Baird analyst Tristan Gerra noted that although the aforementioned news has not been confirmed and the related plans would take a long time to materialize, the rumor is plausible and could further reinforce the core competitiveness and manufacturing capabilities emphasized by Intel’s former CEO.
Tristan Gerra believes that this move would improve Intel’s cash flow and allow it to focus more on design and platform solutions in the future. Additionally, a successful wafer fabrication facility could ultimately attract important companies that lack their own fabs, facilitating a diversified business model in a geographically reliable production environment.
Despite the unverified nature of the rumors, TSMC’s stock price dropped over 1.8% or 20 TWD today, reaching a low of 1080 TWD, and closing down 0.91% or 10 TWD at 1090 TWD, while Intel’s stock surged 7.2%, closing at 22.48 USD.
Risk of technology leakage for TSMC—worse than tariffs
The news triggered a shock in the market. According to Central News Agency reports, semiconductor industry experts assert that this would be the worst option for TSMC, presenting greater disadvantages than imposing tariffs, as TSMC would face the risk of technology leakage.
Liu Pei-jen, director of the Economic Research Database at the Taiwan Institute of Economic Research, analyzed that Intel is currently facing operational challenges and experiencing bottlenecks in technology development. In the global semiconductor manufacturing industry, TSMC holds a leading position. If TSMC were to form a joint venture with Intel, it could assist Intel in overcoming its difficulties and support the development of the U.S. semiconductor manufacturing sector.
However, Liu Pei-jen candidly stated that a joint venture with Intel would actually be disadvantageous for TSMC. TSMC Chairman and CEO C.C. Wei had previously made it clear that he does not consider acquiring Intel’s fabs and is unwilling to take over Intel’s mess. Partnering with a competitor like Intel could expose TSMC to the risk of technology leakage.
While TSMC has adopted a joint venture model for its facilities in Kumamoto, Japan, and Dresden, Germany, Liu Pei-jen pointed out that both facilities are joint ventures with customer partners and involve mature process technologies. In contrast, a joint venture with Intel would inevitably focus on advanced process technologies. Should technology leakage occur, it could endanger TSMC’s leading position in advanced processes, especially since President Trump prioritizes American interests. If TSMC collaborates with Intel, it may find itself at a disadvantage.
Liu Pei-jen emphasized that TSMC holds an irreplaceable position in advanced process technology, possessing strong bargaining power. If the U.S. imposes tariffs on chips, TSMC should be able to smoothly pass on costs to customers. Therefore, forming a joint venture with Intel would be the worst option for TSMC, presenting more disadvantages than tariffs.
