Intel share price shoots up after TSMC rumors

If the US government has its way, the world's leading chip contract manufacturer TSMC will expand its presence in the United States. Rumors from the Far East suggest that TSMC has received three proposals from the US government for chips "Made in America".

Because Intel could benefit significantly from this, its share price has shot up by around 25 percent since Wednesday. Intel is currently in a crisis because the foundry business is only getting off to a slow start. In 2024, the division made a loss of 13.4 billion US dollars.

The most far-reaching proposal is said to involve a joint venture in which various semiconductor companies, led by TSMC, would invest in Intel's chip manufacturing division (Intel Foundry). According to Digitimes' sources, the proposal includes a technology transfer: Intel could license manufacturing technology from TSMC and use it to produce chips in its own semiconductor plants.

Possible plan B for Intel

Should Intel's own Intel 18A manufacturing process fail to meet expectations, Intel would have a backup plan for the production of state-of-the-art semiconductor components. TSMC could earn money in the long term with such a license without the financing risk of additional semiconductor plants. Large semiconductor plants for the most modern production processes currently cost around 20 billion US dollars. TSMC is already building three such US plants by 2030, and even more plants would represent a risk if chip demand were to be dampened.

Another point would be possible retaliatory measures by the USA if TSMC does not support Intel. President Donald Trump recently announced tariffs on Taiwanese chips, which would primarily affect US companies and customers. In addition, the USA could link its promise of military protection for Taiwan from China to such aid.

On the other hand, TSMC would have to weigh up the consequences: Intel Foundry is the biggest potential competitor for high-end semiconductors. With a license, Intel could learn from TSMC's know-how and close the gap.

Packaging cooperations

A second proposal to TSMC envisages its own packaging plants in the USA. The company could then produce chips in Arizona and process them directly. To date, TSMC has only built semiconductor plants for the production of chips, but not for further processing. For simple processors, only one die is placed on a carrier. For more complex designs, several chips are stacked or placed next to each other on a silicon interposer – This is called advanced packaging.

Whether this would make sense, however, remains questionable: TSMC only announced a partnership with the US packaging service provider Amkor in October 2024, which intends to process chips produced by TSMC in its own US plant. This also explicitly involves advanced packaging. Another TSMC plant for chips "Made in America" would therefore not even be necessary.

A third proposal envisages a further form of cooperation between TSMC and Intel Foundry. According to this, Intel could process chips manufactured by TSMC in its own advanced packaging facilities, which are intended for US customers such as AMD, Apple and Nvidia. Intel's expertise in this field is on a par with TSMC's.

(mma)