Taiwan Semiconductor Manufacturing (TSM 2.17%) stock posted gains in Thursday's trading despite a pullback for the broader market. The company's share price rose 2.1% in the daily session. Meanwhile, the S&P 500 closed out the day down 0.3%, and the Nasdaq Composite was down 0.4% in the session.

Taiwan Semiconductor Manufacturing (TSMC) stock is gaining ground today following indications that the company will not purchase Intel's chip foundry business. Some reports have suggested that TSMC could buy Intel's fab business, but it would be a costly move for the business.

TSMC stock climbs on news suggesting Intel combination isn't likely

Intel's foundry business has been struggling. The chip fabrication unit has been racking up billions in losses on an annual basis and failing to attract enough major contracts from third-party customers. Amid the challenges, reports and speculation have emerged that TSMC, Nvidia, and other players in the chip space could step in to buy Intel's chip fab business outright or invest to run the company's foundry unit as a joint venture. But TSMC investors aren't thrilled with the potential arrangement.

What would an Intel acquisition mean for TSMC?

Intel's foundry business has been positing big losses, and it's not clear that the fabrication unit will emerge as a preferred provider of foundry services for companies producing artificial intelligence (AI) chips and other high-performance semiconductors. If Intel's fab business emerges as a leading foundry services provider for chip companies within the U.S., the stock could post huge gains. But investing in Intel's foundry business isn't a surefire win for TSMC. If Taiwan Semiconductor Manufacturing pours money into Intel's foundry unit, there's a significant risk that things won't pan out over the long term. This dynamic explains recent volatility for both stocks.