Intel (INTC) shares experienced roughly a 23% increase over the week, marking its largest weekly gain since 2000. This surge was driven by optimistic statements from US Vice President JD Vance regarding domestic AI chip manufacturing and speculation about a potential partnership with TSMC (TSM).
The rally for Intel commenced after Vice President JD Vance discussed domestic chip production during his speech at the AI Summit in Paris on Tuesday. He stated that the Trump administration would “ensure” AI in the US would be produced using “American designed and manufactured chips.” Following these remarks, Intel’s stock jumped by 6%.
Once the foremost semiconductor company globally, Intel now faces challenges but stands as the sole American firm capable of large-scale production of AI chips if its latest manufacturing advancements succeed. Despite rivals like Samsung (005930.KS) and TSMC expanding in the US under the US CHIPS Act, much of their production capabilities remain based in their respective home countries.
Major American technology companies, including Apple (AAPL) and Nvidia (NVDA), depend on TSMC (TSM) rather than Intel for their most sophisticated chips, with Taiwan representing the second-largest source of semiconductor imports to the US. The increasing risk of a Chinese invasion of Taiwan amid escalating US-China tensions has led the US government to prioritize the growth of its domestic chip manufacturing sector.
Intel’s stock also benefitted this week from reports suggesting actions by the Trump administration that could support Intel’s comeback efforts by involving help from TSMC.
An analyst from Baird indicated in a note to investors that there are rumors regarding US funding for a collaboration between TSMC and Intel, where TSMC would “send engineers” to Intel, leveraging their expertise to make Intel’s fabrication and subsequent manufacturing projects viable.
According to tech news outlet DigiTimes Asia, citing anonymous sources, the proposed joint venture was one of three options the US government has discussed with TSMC in private conversations. Another option would permit Intel to manage its packaging orders from customers based in the US, according to industry insiders.
However, Wall Street analysts expressed skepticism regarding the feasibility of such a venture.
“[W]e can’t see why TSMC would want to voluntarily license their process technology and intellectual property to a potential competitor unless the terms are highly advantageous,” Bernstein analyst Stacy Rasgon commented. He also pointed out that the necessity for this joint venture raises concerns about Intel’s ability to develop AI chips effectively.
