Intel surged, while Taiwan Semiconductor plummeted. What happened?

Wall Street is excited! A new CEO is about to take office, and the wafer factory is expected to be taken over, leading to a significant overnight surge in Intel's stock price.

On Thursday, Intel's stock price rose nearly 15% against the market trend, closing at $23.70, leading the S&P 500 index constituents; TSMC, on the other hand, fell over 3%.

According to media reports, the strong rebound in Intel's stock price is mainly driven by two positive news: First, Intel appointed Lip-Bu Tan, the former CEO of semiconductor software company Cadence, as the new CEO; second, TSMC may form joint ventures with several chip giants to operate Intel's wafer factory.

The decline in TSMC's stock price, according to analysts, may be due to market concerns that after the establishment of the joint venture, Intel will not completely exit the foundry business, thereby harming TSMC's interests.

Will the new CEO bring a turnaround? Wall Street is generally optimistic

Reports indicate that Lip-Bu Tan, the former CEO of Cadence Design Systems, will join Intel as CEO, which has sparked widespread optimism in the market.

Bank of America stated that Tan has a "solid track record of success" and that Cadence has previously collaborated with Intel, "We believe under his leadership, Intel has a greater chance to restructure and turn the situation around."

Deutsche Bank analysts share a similar view, stating that Tan's appointment is an "ideal outcome" for Intel and emphasizing his "rich expertise in the semiconductor ecosystem."

Public information shows that Tan founded Walden International investment company at the age of 28 and transitioned to become the CEO of Cadence Design Systems at 50. However, his main experience is concentrated in the investment field and the EDA software industry, rather than semiconductor manufacturing.

There are reports that Tan previously supported the spin-off of manufacturing operations during his tenure as a board member at Intel. Additionally, insiders revealed to the media that Tan is extremely dissatisfied with Intel's redundancy issues.

Rumors suggest that during a casual conversation with three Intel vice presidents, when asked how he would manage if he became CEO, he bluntly stated, "I would fire two of you three."

Despite the significant rebound in stock price, Intel's market value has still evaporated by nearly half over the past 12 months, indicating that the challenges facing the company remain severe.

TSMC teams up to save Intel: A key turning point or idealism?

According to Reuters, citing informed sources, TSMC is in contact with chip companies including NVIDIA, AMD, Broadcom, and Qualcomm, planning to form a joint venture to operate Intel's wafer factory, with TSMC holding 50% of the joint venture.

It is noteworthy that this plan has received support from the Trump administration, as the U.S. government seeks to involve TSMC in efforts to save Intel, meaning any final arrangement will require approval from U.S. regulatory authoritiesBank of America analysts believe that such an arrangement "could assist Intel in its potential transformation efforts under the new CEO's leadership."

Information Equity Analysis points out that if this news is true, there are two possible forms of cooperation:

First, Intel completely exits the manufacturing business. This would be extremely beneficial for Intel (expected to achieve profits of $6-8 billion in 2026-2027), and in the long term, it would also benefit Taiwan Semiconductor, but it could be negative for semiconductor equipment manufacturers, as Taiwan Semiconductor's equipment procurement volume may significantly decrease.

Second, Intel establishes a joint venture foundry with Taiwan Semiconductor and other companies. This model faces serious conflicts of interest; if Taiwan Semiconductor goes all out to help the joint venture succeed, it could ultimately create a strong competitor; if Taiwan Semiconductor operates the joint venture passively, it will be difficult to meet the expectations of the U.S. government.

Wafer Foundry Business: Intel's Pain Point

Intel's wafer foundry business has always struggled to compete with Taiwan Semiconductor and Samsung.

In the past, Intel adopted a cost-plus pricing model, and its near-monopoly position in the PC market made this strategy effective. However, as AMD's cooperation with Taiwan Semiconductor has become increasingly close, performance has gradually surpassed Intel since the 7nm era, leading to the gradual collapse of Intel's advantages.

Information Equity believes that Intel's "squeezing toothpaste" stagnation on the 14nm process has caused it to fall behind in technological competition—if Intel insists on competing with "design + in-house manufacturing" against "AMD design + Taiwan Semiconductor manufacturing," it may not completely fail due to brand premium, but it is almost impossible to succeed in the foundry field against Taiwan Semiconductor.

Intel's wafer fab assets are valued at approximately $108 billion, but it recorded a financial loss of $18.8 billion in 2024, marking its first loss since 1986. Despite receiving multiple acquisition requests, Intel has resisted proposals to separate its design department from its wafer fab business.

Currently, Intel's financial situation is quite concerning. The company generates about $10 billion in operating cash flow annually, while recent capital expenditures have reached $24-25 billion. By the end of 2024, it is expected to have only $800 million in cash on handEven if capital expenditures are reduced to $20 billion, there will still be an annual funding gap of about $10 billion.

Analysis indicates that based on the progress and yield expectations of the 18A process, Intel's profitability may not significantly improve until after 2026. This means the company may need to raise $15-20 billion this year to sustain itself until 2027, while its current market value is only $89 billion.

According to reports, some members of Intel's board have expressed support for the joint venture, but there are still some executives who oppose it. Considering that Intel and Taiwan Semiconductor use different production processes, chemicals, and tool configurations, technological integration will also pose a significant challenge, potentially hindering cooperation between the two parties