Intel (INTC, Financial) stock rose 4% on Wednesday morning after investment banker R.W. Baird sparked fresh discussion about a potential strategic tie-up with Taiwan Semiconductor Manufacturing Company (TSM, Financial). Baird analyst Tristan Gerra reveals that discussions emerging from Asia's supply chain explore Intel spinning off its semiconductor fabrication unit into a joint venture with TSMC. Under this proposal, TSMC would provide critical semiconductor engineers and technical expertise to help manufacture advanced 3?nanometer and 2?nanometer chips in the U.S., supported by federal subsidies from the CHIPS Act.

They consider the pros and cons in detail as they weigh the benefits against the considerable challenges. Having sat in the red for $18.8 billion over the past 12 months, Intel doesn't expect it to be profitable on a GAAP basis until 2026. Valuation concerns continue, with the stock trading at 74 times next year's earnings. Until the rumor becomes verifiable facts, analysts keep a neutral view.