Shares of Intel (INTC -11.68%) are tumbling on Thursday. The chipmaker's stock lost 10.8% as of 1:40 p.m. ET despite a brief bump earlier on positive news. The decline comes as the S&P 500 (^GSPC -5.37%) and Nasdaq Composite (^IXIC -5.46%) saw deep red.
A potentially transformative deal with TSMC was overshadowed by China's retaliation to Trump's tariffs.
Intel and Taiwan Semiconductor Manufacturing (TSMC) -- the world's premier chip manufacturer -- have reportedly reached a tentative agreement that could revitalize Intel's struggling foundry business. Under the deal, TSMC would take a 20% stake in a new organization that would operate Intel's semiconductor manufacturing facilities, with Intel and other U.S. semiconductor firms controlling the remainder.
Intel's foundry business has been a source of pain for the struggling chipmaker. The deal would be a remarkable collaboration between what are otherwise competitors and could help revitalize Intel. TSMC would provide both its technical expertise and help transform Intel's management culture, which has garnered a reputation for sluggishness in recent years.
Despite the potentially transformative deal, the escalating trade war sent Intel's stock lower. In response to Trump's new tariffs, China announced a 34% levy on U.S. goods. Intel does a significant portion of its business in China, and the new tariffs represent a material threat to its business. The tariffs will make Intel's ability to sell in China at a competitive price difficult, and it could find itself ceding market share to Chinese chipmakers.
Intel is an interesting long-term play, but the current uncertainty around trade means I would hold off for the time being until more clarity emerges.
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