This development follows months of pressure from the US government to stabilize Intel, once a dominant name in semiconductors, now struggling to keep up with rivals. The joint venture, if finalised, will see TSMC take a 20% stake in the company that runs Intel’s fabs.

In what could be one of the most important chip industry moves of the year, Intel and Taiwan Semiconductor Manufacturing Co. (TSMC) have reportedly agreed to form a joint venture that would operate Intel’s chipmaking plants in the US. The news was first reported by The Information and later picked up by Reuters, citing two people directly involved in the discussions.

TSMC steps in as Intel falters

Intel has since tried to course-correct. The appointment of industry veteran Lip-Bu Tan as CEO in March was one such move. But insiders say the company’s chipmaking foundry business has struggled to match the level of customer service and technical performance delivered by TSMC, which has been leading the global foundry space for years.

Intel’s manufacturing problems have been piling up over the last few years. It missed the AI chip boom, failed to deliver results with its foundry ambitions, and posted a $18.8 billion net loss in 2024—the first in nearly four decades. Its shares crashed by 60% that year, even as the broader S&P 500 went up by 23%.

Now, TSMC might be stepping in to clean up the mess—or at least run part of it. The Taiwanese chip giant, which recently announced a massive $100 billion investment in the US, is expected to co-manage Intel’s fabs and bring its own know-how to the table.

US push behind the scenes

Interestingly, the agreement hasn’t gone down well with everyone inside Intel. As The Information reports, some executives fear the deal could mess with Intel’s own chip technology roadmap and even lead to layoffs. Integrating two very different manufacturing systems—Intel and TSMC use different tools, materials, and processes—will also be a serious challenge.

The deal, according to the report, didn’t happen in isolation. The White House and the Department of Commerce have reportedly been nudging both companies to strike an agreement. Washington sees this partnership as a way to fix Intel’s operations without fully selling its factories to a foreign firm—something the US government is clearly against.

TSMC had earlier been in talks with US-based chip designers like Nvidia, AMD, and Broadcom to invest in the joint venture. Those talks didn’t move forward, but the move to partner with Intel marks a serious shift in how the US plans to build a homegrown, secure chip supply chain.

Markets react sharply

Intel’s stock jumped nearly 7% after news of the deal broke, as investors saw hope for a turnaround. TSMC’s US-listed shares, on the other hand, fell about 6%, showing some investor caution about the financial and operational risks of entering this partnership.

The political layer is also hard to miss. Former US President Donald Trump has previously accused Taiwan of “stealing” the chip industry and is now aggressively pushing for more American-made semiconductors. The latest joint venture may be a direct outcome of that pressure, as the US tightens its grip on strategic tech industries.

As the global semiconductor race intensifies, this Intel-TSMC partnership could redefine chipmaking in America. But with so many moving parts—politics, tech, money, and strategy—whether it succeeds or not is still up in the air.

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