Intel and TSMC have agreed to start a joint venture in the US. The new organization would take over at least part of Intel’s factories.
Intel has reportedly closed a conditional agreement with TSMC to establish a joint venture in the US. This new enterprise would gain control over at least part of Intel’s chip factories. The Information reports this based on anonymous sources. The news would be transformative for Intel but has not been officially confirmed anywhere yet.
Not a Complete Sale
According to the agreement, Taiwanese TSMC would acquire 20 percent ownership of the joint venture. Whether Intel will retain the other 80 percent is unknown. Intel must in principle retain at least a majority stake, as this was one of the conditions for $7.9 billion in American subsidies.
The US government has reportedly been heavily involved in the deal. The US views Intel’s instability with concern and believes that splitting off the factories will have a positive impact on both the company and the security of advanced chip production on American soil.
Intel is the last major chip manufacturer with vertical integration: no other party both builds and develops chips themselves anymore. Nvidia and AMD, for example, are chip designers, while TSMC is a chip builder. AMD split off its fabrication division more than a decade ago, which then grew into the company known today as GlobalFoundries.
Gelsinger
During Pat Gelsinger’s tenure as CEO of Intel, he wanted to make the fabrication business a separate division. He organized the factories under the Intel Foundry division and opened them up to external customers. A partial spin-off is a logical next step in that story.
It is unclear what TSMC can currently do with Intel’s factories. Chip factories are highly specialized facilities. When developing a chip, one must decide fairly quickly in which factory and with which process it will be manufactured. Part of the design process is tailored to the systems of the producer. Intel and TSMC use different processes and mechanisms. So it’s not as if TSMC can suddenly produce designs from its own customer in an Intel factory.
Pending official confirmation, details remain scarce. If the news is true, it would mean a huge step for Intel. The company could then further focus on developing advanced CPUs without being entirely responsible for investments in the innovation of its own factories.