Intel’s TSMC Joint Venture Unlikely As Latter Might Build Packaging Factory Instead, Says Investment Bank

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Chip maker Intel Corporation’s rumored joint venture with the Taiwan Semiconductor Manufacturing Company (TSMC) to boost US chip manufacturing might face anti-trust concerns, believes investment bank Jefferies. Intel’s shares have gained 25% over the past five days after Vice President JD Vance hinted in Paris that his administration would focus on manufacturing the most advanced artificial intelligence semiconductors in the US. Investors are hopeful about the firm’s prospects of regaining manufacturing process technology leadership, but Jefferies remains cautious and believes that TSMC manufacturing a packaging facility in the US is a likelier option.
TSMC More Likely To Set Up Packaging Facility In US Instead of JV With Intel, Believes Jefferies
Intel’s manufacturing troubles have now placed its attempts to manufacture high volume 18A products and secure orders for the foundry business the top priority for management. Ever since former CEO Patrick Gelsinger’s surprise departure last year, rumors have also swirled about the firm potentially spinning off its manufacturing business to focus on chip design and streamline the balance sheet.
Now, after Vice President JD Vance hinted at an AI summit earlier this week that the Trump administration would seek to manufacture advanced AI chips in the US, Intel’s shares have been on a tear. The stock is up by 25% over the past five days, with speculation building after Taiwan’s TSMC held a meeting in the US.
Investors believe the strongman Trump administration could compel TSMC to set up a joint venture with Intel. Such an entity would allow Intel to overcome any advanced manufacturing delays and ensure that US-based facilities can produce leading-edge chips.
Intel’s revenue by segment during Q4 2024. Image: Intel Corporation
Commenting on the recent narrative surrounding Intel’s stock, investment bank Jefferies outlined three outcomes that could occur given the Trump administration’s purported new approach. These are TSMC building a new packaging facility in the US, TSMC and Intel entering into a joint venture to allow advanced chip manufacturing technologies to transfer to US soil and Intel taking over TSMC’s packaging contracts.
Packaging has emerged as a key bottleneck in TSMC’s plans to make the most advanced chips in the US. While its new facility in Arizona can manufacture chips with 4-nanometer manufacturing technologies, they have to be shipped to Taiwan for packaging and then shipped back to the US. On the other hand, Intel has robust packaging capabilities that have not been hampered by delays similar to those of its advanced manufacturing processes.
However, the investment bank believes that the first option, i.e., TSMC setting up a packaging facility in the US is more likely than a joint venture between it and Intel. A US packaging facility would remove a major bottleneck from TSMC’s advanced manufacturing process flows and ensure that the most advanced AI chips are made in America to align with Vance’s comments.
While the Taiwanese fab’s most advanced technologies, i.e., the 2-nanometer process, are only capable of being produced in Taiwan, AI chips often rely on older nodes due to higher power consumption. As a result, the site in Arizona can make the most advanced products, namely those for GPU giant NVIDIA Corporation.