Intel Corporation (NASDAQ:INTC) has been struggling for years, and many on Wall Street are questioning the company’s foundry ambitions.  The U.S. has stated that they want more chip manufacturing in the country, and with Intel being the only U.S. company with such capacity, it is considered critically important.  However, given struggles, questions have remained about what can be done with the foundry unit, which was separated into an independent subsidiary inside of Intel in 2024.  Now, there are rumors in the supply chain that the U.S. government could get dramatically involved and force a joint venture deal between Intel and its largest Asia-based competitor.

According to Baird analyst Tristan Gerra, there are rumors in the supply chain that the U.S. government will potentially push Intel to form a joint venture with world-leading chip maker Taiwan Semiconductor Manufacturing (NYSE:TSM).

According to rumors, TSMC would deploy engineers to Intel's 3nm/2nm fab, leveraging its expertise to ensure the facility's success and the viability of Intel's future manufacturing projects. The fab could be spun off into a new joint venture, co-owned by TSMC and Intel, with TSMC overseeing operations. This new entity would also be eligible for funding under the U.S. CHIPS Act.

“While there is no confirmation and potential completion of this project could be lenghty, we think this move makes sense…” Gerra commented. 

This builds on Intel's former CEO's emphasis on the company's core strength: manufacturing, the analyst added.

He said moving forward, Intel would gain significant cash flow relief, allowing it to concentrate on design and platform solutions. Meanwhile, a successful fab could attract key fabless companies seeking a geographically reliable manufacturing alternative.

While the analyst is bullish on the possibility of such a deal, he still maintained a Neutral rating and a $20 price target on the stock.

Shares of Intel are up 3.5 percent in mid-day trading Wednesday.

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