Intel has been publicly struggling for a couple of years now, but the tech giant's hardships may be temporarily hlated thanks to a potential new partnership with its biggest foreign rival, TSMC.
A new report from The Information claims that executives from Intel and Taiwan Semiconductor Manufacturing Co. have entered into a "preliminary agreement" that would form a joint venture between the two chip makers.
The new venture would operate Intel's foundries and TSMC would take 20% stake in the new company.
Reportedly, Intel and unnamed other U.S. semiconductor companies would hold the rest of the shares.
As part of the agreement, TSMC would potentially share some of its "chipmaking methods" with Intel and train Intel employees how to utilize the methods. This would be instead of just providing funding via capital.
The report notes that discussions are ongoing and have not been finalized as of this writing. Things could change quickly between now and a formal agreement.
Intel resistance
One hold up might be from the Intel side of things.
Apparently some Intel executives are worried that the agreement would trigger widespread layoffs while also "subsuming its own chipmaking technology."
This is not an unfounded fear as Intel laid off 15% of its workforce last year in an attempt to reduce costs and save over $10 billion by 2025. Those layoffs included a significant chunk of Intel's R&D department.
Trump wants Intel to build in the US
The Trump administration has a desire to bring industry back to the United States out of a belief that other countries are "ripping" the country off. And it has publicly backed Intel several times. Trump is eager to bring chip making back to the U.S.
According to The Information, his administration may have initiated talks between the two chip manufacturers.
TSMC has recently increased investments in the U.S. including at its Arizona facility that makes some Apple chips. The company has maintained that the investments in America have been driven by customers, though President Trump has taken credit for it thanks to his tariffs.
Last year, the Biden administration considered direct cash infusions and potentially forcing a merger with AMD help Intel.
Outlook
TSMC has seemingly taken over the world in chipmaking in recent years thanks to its singular focus on chip manufacturing and not chip design, which it leaves up to its partner companies. Often, this creates lower costs that companies like Intel have struggled to compete with.
This deal could irrevocably alter Intel's future. Sources told The Information that there is fear the deal would end up with Intel laying off semiconductor engineers, altering its strategies and possibly selling off pieces of the company like the foundry business.
Again, the deal is only in preliminary stages and could change drastically between now and a formal deal. Or it could fall apart due to internal Intel resistance.
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