With rumors swirling of a potential deal between Intel and TSMC to allow the former's fabs to manufacture the most advanced chips in America, a report from the Taiwanese press claims that TSMC might acquire a 20% stake in Intel's Intel Foundry business. Anti-trust laws typically prevent major companies in a market from coming together, and a 20% stake would allow TSMC to collaborate with Intel while avoiding regulatory scrutiny. Intel's shares have been on a tear and have gained 22.5% over the past five days and 16.7% year to date in a cycle kicked off by Vice President JD Vance's comments in Paris that stressed manufacturing the most advanced semiconductors in the US.

TSMC Might Acquire 20% Stake In Intel's Intel Foundry Services (IFS) Business, Says Report

While reports of TSMC being purportedly offered to run Intel's foundries are rapidly spreading, the Taiwanese should find it difficult to run Intel's manufacturing facilities since chip companies use vastly different operational processes to make chips. Additionally, any deal involving Intel and TSMC would undergo strict regulatory scrutiny and might not receive clearance due to monopolistic concerns.

A fresh report, this time from Taiwan's Economic Daily, hints that TSMC might acquire a minority stake in Intel. Additionally, US chip designers Qualcomm and Broadcom might play an important role in the deal as well. The report outlines that the pair can help with the deal by placing orders with the new entity and ensuring that it can smoothly transition to an operational status.

The Economic Daily's report claims that the Trump administration, under its Made in America plans, hopes that TSMC acquires a 20% stake in Intel's Intel Foundry Services (IFS) business. The report adds that TSMC's investment in IFS might either be through a cash injection or through providing technology, with the final terms being undecided as of now.

For Broadcom and Qualcomm, an investment in IFS will enable them to better compete with Taiwan's MediaTek. While Chinese technology giant Huawei cannot procure chips manufactured with the most advanced processes, MediaTek faces no such restrictions, and its operations in Asia allow it to compete with the US firms on a cost basis.

Reports of an Intel spinoff have been swirling ever since former CEO Patrick Gelsinger's surprise resignation last year. Operating chip manufacturing facilities is a costly endeavor, and one which Intel has struggled to fund due to a sluggish personal computing market and growing demand of GPUs in the enterprise computing sector.

Financial troubles forced the firm to conduct large scale layoffs and suspend its dividend. While Intel's stock has gained 16.7% year-to-date, the shares are nevertheless down by 46% over the past year as it races to introduce new products and achieve stable production and yields with the 18A manufacturing process technology node.

18A is central to potential spinoff or acquisition as it will determine the orders that the new business can receive for its chips. Intel became the first firm in the world to acquire Dutch firm ASML's advanced high NA EUV chip manufacturing machines. Yet, it posted another net loss in its fourth quarter and guided revenue below consensus analyst estimates.