Recently, the appointment of Intel's new CEO and potential cooperation with TSMC have been in the spotlight, reflecting Intel's urgent need to seek breakthroughs in a complex market environment.
Intel's appointment of Liwu Chen as CEO marks a new phase of development for the company. Over the past four years, under Pat Kissinger's leadership, Intel has not had a smooth run. Product revenue continues to decline, and in the artificial intelligence chip market, it is far behind by NVIDIA. In the fourth quarter of 2024, Intel's sales fell 7% year-over-year, resulting in a net loss of about $126 million, in contrast to earnings of $2.7 billion in the same period the year before. In such a predicament, Chen Liwu was ordered to be in danger. His previous experience at Cadon Electronics, a company that provides software to a wide range of chip designers, may bring new ideas to Intel. Chen Liwu said that he will adopt differentiated strategies according to the company's different business conditions, consolidate and expand advantages in advantageous areas, take risks and breakthroughs in backward fields, and accelerate the pace in areas where progress is slow. The market reacted positively to the personnel change, with Intel shares up 12% in after-hours trading, suggesting that investors have high hopes for Chen to turn the tide with LinkedIn.
At the same time, there was news of a potential cooperation between Intel and TSMC. TSMC has proposed a joint venture with Intel to operate Intel's foundry division, with companies such as Nvidia, AMD, Broadcom and Qualcomm likely to participate. TSMC plans to hold no more than 50% of the shares to avoid being seen as fully owned by foreign investors, although the partnership would require U.S. government approval. In fact, the two sides have cooperated before.
Figure:Intel's Change: The Dual Challenges of New Boss and Strategic Transformation
In September 2023, Intel sold about 10% of IMS Nanofabrication to TSMC to help it grow. If the joint venture is successful, Intel can use TSMC's operating experience and financial support to improve the loss situation of the foundry division. But it also means that Intel will partially lose control of its critical business. Moreover, the opposition of some Intel executives to the sale of the chip design division separately, the differences in the manufacturing processes of the two companies, and the controversy over the 18A process have added variables to the cooperation.
From TSMC's perspective, its investments in the U.S. are expanding. In 2020, the construction of the first U.S. semiconductor factory in Phoenix, Arizona was announced, and the investment increased to $4 billion in 2022. In 2024, TSMC is expected to receive up to $6.6 billion in direct funding to build three advanced fabs under the CHIPS and Science Act. In 2025, TSMC further announced an investment of $100 billion for new fabs, packaging facilities, and R&D centers. Managing Intel's foundry will cement TSMC's position as a global leader in semiconductor manufacturing and expand its presence in the U.S., but it may also face operational challenges due to technical differences.
For the U.S. semiconductor industry, Intel's series of changes has far-reaching implications. Whether Chen Liwu's leadership can help Intel regain its competitiveness is related to the internal pattern of the U.S. semiconductor industry. The cooperation between Intel and TSMC, if successful, will strengthen the production capacity of advanced chips in the United States to meet the needs of artificial intelligence, high-performance computing and other fields, but it may also impact the United States' goal of achieving complete self-sufficiency in chip manufacturing.
Intel is at a critical inflection point, with uncertainty about the strategic decision of the new CEO and the direction of the partnership with TSMC. In the highly competitive semiconductor market, Intel must accurately grasp the opportunities and effectively respond to the challenges in order to achieve revival and continue to write the glory of the industry, and the semiconductor industry is also waiting to see what Intel will do next.
