American chipmaker Intel’s (INTC) new CEO, Lip-Bu Tan said that he is in discussions with the CEO of Taiwan Semiconductor Manufacturing (TSM) about a potential “win-win” partnership. Intel’s foundry business is struggling, since its integrated device manufacturing (IDM) system for chip production has seen little success. In contrast, a majority of American semiconductor companies only focus on designing chips and outsource their manufacturing to contract chipmakers, including TSMC.
Intel Eager to Partner With TSMC
Tan shared the news during Intel’s Q1FY25 earnings call held yesterday. Tan said that he recently met with TSMC’s CC Wei to “try to find areas we can collaborate and so that we can create a win, win situation.” Tan added that he shares long-time friendship with both Wei and TSMC’s retired founder, Morris Chang, and emphasized that Intel sees TSMC as a valued partner.
Wei recently attended TSMC’s annual technology conference in Silicon Valley, which was also attended by Tan, and was probably the venue for their discussions. The talks focused on potential areas of collaboration that could benefit both companies. Since early April, rumors have circulated about a possible joint venture between Intel and TSMC to salvage the former’s struggling foundry business. However, TSMC denied any such developments last week.
Intel’s Woes Worsen Amid Time and Tariffs
Intel’s woes have worsened with the recent tariffs’ announcement. The company, once seen as a dominant player in the global semiconductor market, lost its standing during the fast-paced artificial intelligence (AI) chip race. Despite reporting robust Q1FY25 results, INTC stock slipped more than 5% in after-hours trading yesterday.
Intel surpassed analysts’ expectations on both sales and earnings per share (EPS), but its Q2 guidance fell short. The CEO noted that Intel is focused on reducing costs, improving efficiency, and enhancing product offerings. At the same time, CFO David Zinser said that uncertainty revolving around the U.S. trade policies, high regulatory risks, and the possibility of a recession have made it difficult to predict the company’s performance for Q2 and beyond.
We used TipRanks’ Stock Comparison Tool to understand analysts’ recommendations on the two companies. Currently, analysts are highly bullish about TSM stock with a “Strong Buy” consensus rating and 33.7% upside potential in the next twelve months.
