Intel eyes joint venture with TSMC in bid to rescue chip strategy
The move may spark layoffs and internal resistance, but aims to save Intel’s foundry dream.
Intel and Taiwan-based chipmaker TSMC have reached a preliminary agreement to form a joint venture that would operate some of Intel’s manufacturing facilities, according to reports by Bloomberg and The Information. If finalized, the deal would mark a dramatic shift—TSMC, the world’s leading producer of high-performance chips and a longtime rival, would become a partner. Under the reported terms, TSMC would hold a 20% stake in the new company, while Intel and other U.S. chipmakers would retain majority control.
The joint venture is expected to include at least some of Intel’s existing manufacturing facilities. It remains unclear whether the plan will apply only to U.S.-based plants or extend to international locations, including Intel’s major manufacturing site in Kiryat Gat, Israel.
According to sources familiar with the matter, TSMC does not intend to invest capital in exchange for its 20% stake. Instead, the company would contribute expertise—sharing its chip production methods and mentoring Intel's manufacturing teams. The source of the capital required to launch the venture remains uncertain, and negotiations are still ongoing. The companies have yet to reach a binding agreement.
Inside Intel, the proposed deal has sparked internal resistance. Several senior executives reportedly oppose the plan, fearing it could lead to widespread layoffs and a further erosion of Intel’s independence.
The talks come just days after new CEO Lip-Bu Tan made a candid admission of Intel’s struggles at the company’s Vision 2025 event. “It has been a tough period for quite a long time for Intel,” Tan said. “We fell behind on innovation. As a result, we have been too slow to adapt and to meet your needs. You deserve better, and we need to improve.”
Tan has insisted that Intel will remain in the manufacturing game, despite speculation of an exit. “We are here to serve you and earn your trust,” he said. “I won’t be happy and satisfied until we consistently deliver our promise, on time, on quality, to exceed your expectation.”
Intel’s crisis has been deepening in recent years, due largely to its failure to adapt to the mobile and AI revolutions. Former CEO Pat Gelsinger, who resigned abruptly in December, attempted to pivot the company toward a new model: acting as a contract manufacturer for third-party chipmakers, rather than solely producing chips it designs in-house.
As part of that pivot, Intel has committed hundreds of billions of dollars to build new cutting-edge fabrication plants. That includes a $25 billion investment in a new facility at its Kiryat Gat campus and several multi-billion-dollar projects across the U.S., heavily subsidized by the Biden administration through the CHIPS Act.
Despite these investments, Intel has struggled to attract major, profitable customers to its foundry business. At the same time, the company’s revenues and profits continue to decline.
In February, reports surfaced that Intel was in talks to sell its chip manufacturing operations to TSMC. The company was also said to be weighing the sale of its chip design division, or even both units—a move that would effectively end Intel’s existence as an independent chipmaker.
In March, Reuters reported that TSMC had been in discussions with Nvidia, AMD, and Broadcom to form a joint venture to acquire control of Intel’s manufacturing division. Nvidia CEO Jensen Huang later denied knowledge of such talks.
This week, Tan pushed back against the idea that Intel would fully exit the manufacturing business. “As we strengthen our Intel products, we are equally committed to building a great foundry,” he said. The reported joint venture with TSMC may offer a strategic middle ground—allowing Intel to resolve its manufacturing challenges while maintaining, at least nominally, control over the division.
