Intel (INTC) stock was set to notch a 23% weekly gain Friday, the largest since 2000, in a rally fueled by US Vice President JD Vance's bullish comments on domestic AI chip production earlier this week and investor speculation over a joint venture with TSMC (TSM).

Intel’s weeklong rally began after Vice President JD Vance spoke about domestic chip manufacturing during an address at the AI Summit in Paris Tuesday. Vance said the Trump administration would “ensure” that AI in the US is built “with American designed and manufactured chips.” Shares of Intel jumped 6% following the comments.

Struggling chipmaker Intel, once the world's leading semiconductor firm, is the only American company that would be capable of manufacturing AI chips at scale, if its latest manufacturing developments are successful. Rivals Samsung (005930.KS) and TSMC have expanded operations in the US with support from the US CHIPS Act, but most of their manufacturing capabilities are in their home countries. 

Leading American tech firms such as Apple (AAPL) and Nvidia (NVDA) rely on Taiwan's TSMC (TSM), not Intel, to make their most advanced chips, and Taiwan accounts for the second largest share of total semiconductor imports in the US. The risk of a Chinese invasion of Taiwan, given rising US-China tensions, has prompted the US government to focus on expanding its domestic chip manufacturing footprint.

Intel's stock was also helped this week by reports that the Trump administration is making moves that could aid Intel's turnaround effort by enlisting the help of its rival TSMC. 

A Baird analyst on Wednesday wrote in a note to investors that there are rumors of the US funding a joint venture between TSMC and Intel, in which TSMC would "send engineers" to Intel, "applying the company's know-how to insure that fab and subsequent manufacturing projects from Intel become viable." 

Tech news site DigiTimes Asia, citing unnamed sources, said Thursday that the joint venture was one of three proposals the US government had floated to TSMC during confidential discussions. Another proposal would involve TSMC allowing Intel to handle its packaging orders from US-based customers, the outlet said, citing industry sources. 

Wall Street analysts were skeptical about such a venture.  

“[W]e don’t know why TSMC would want to license their process tech and IP (voluntarily at least) to a potential leading edge competitor, unless the terms are very favorable,” Bernstein analyst Stacy Rasgon wrote. He added that the need for such a joint venture, or for TSMC to help Intel at all, raises concerns about whether Intel is on track to produce AI chips.

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“None of this really makes a ton of sense to us,” Rasgon said of the DigiTimes report, continuing, “In any event we don’t think we would be buying Intel on this.” Rasgon has a Market Perform rating on Intel stock. 

Rasgon said the US is better off continuing its current strategy under the US CHIPS Act of incentivizing foreign firms to expand their footprint in the US: “Frankly it would seem easier for the US to pursue a “made in America” mandate by simply encouraging TSM to build more capacity in the US (which would also carry much less risk than trying [to] rescue Intel from their situation)."

Intel stock pared its weekly gains Friday, sinking as much as 3% during the session. The stock is up more than 15% this year.

Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.

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