Intel’s Comeback Is Taking Shape. Why Hand It Over To TSMC?

Intel stock (NASDAQ:INTC) rallied by close to 16% in Tuesday’s trading, after a Wall Street Journal report indicated that Broadcom and TSMC were exploring potential bids for the storied chipmaker. Broadcom is reportedly interested in Intel’s chip design businesses, while TSMC might seek a stake or full control of Intel’s production facilities. No formal bids have been made yet, per the report. However, Intel’s business has been showing signs of a potential recovery in recent months. The manufacturing processes the company had been betting its foundry operations on have reached crucial milestones, while the company’s latest chips are also well reviewed. Moreover, the current Presidential administration’s policies also bode well for U.S. based manufacturers like Intel. This begs the question, is this really the right time to sell out?

Image by foto qin from Pixabay

18A Process Nodes Show Promise

Intel has invested heavily in its foundry business in the U.S. over the last few years. While the unit has struggled, losing nearly $13 billion last year, Intel could be on the cusp of a turnaround. The Intel 3 process node has been in mass production for several months now and is used to make the Xeon 6 data center chips. Processors made using the latest Intel 18A process are being sampled with laptop manufacturers. Intel has talked up the 18A process in the past, indicating that it could help the company reclaim “process leadership,” which essentially means having the most advanced semiconductor manufacturing technology in the industry, after years of falling behind foundry behemoths TSMC and Samsung Electronics. Intel’s process apparently has its advantages. While both the Intel 18A and TSMC’s competing N2 process have gate-all-around transistors, Intel’s fabrication process includes an additional innovation called backside power delivery, which touts improved efficiency and performance.  Customers are also seeing higher confidence in Intel’s process technology. Microsoft and Amazon have already contracted Intel to fabricate some of their custom chips, including AI accelerators, and this trend could pick up. Separately, if you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

Trump’s U.S. Manufacturing Push

President Donald Trump has been a major advocate of boosting U.S. manufacturing and this is expected to play in Intel’s favor, considering its sizable fabrication footprint in the United States. The new Administration also wants AI chips to be manufactured domestically, with both design and production taking place in the U.S. to safeguard American AI technology and intellectual property. There’s a possibility that this could result in considerable regulatory support via tariffs or other policies, driving more business to Intel’s foundry unit as companies look to U.S. suppliers to avoid potential duties. This could drive more foundry business Intel’s way. See how Trump and New Manufacturing Processes Help Intel Stock. By potentially handing over stake or control to TSMC, Intel shareholders could lose out on this upside.

Positive Reviews For Latest Chips

Intel’s latest processor are also seeing better reviews. Preliminary benchmarks from PassMark show that Intel’s new Arrow Lake-based Core Ultra 9 chip outperforms AMD’s competing Ryzen 9 processor by about 7% in CPU benchmarks. Additionally, it is 34% faster than the previous generation i9-14900HX, with single-thread performance improving by 9%. Unlike Intel’s AI-focused Lunar Lake chips, these new processors prioritize raw performance for demanding productivity and creative workloads. This launch comes at a relatively opportune time. Over the past two years or so, companies have likely under-invested in traditional CPU-based computing while aggressively securing GPUs, driven by FOMO, or the “fear of missing out” on securing the compute capacity needed for AI deployment. As CPU-related spending potentially rebounds, Intel might be better-positioned to benefit after years of market share losses in both the client and server markets.

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For long-term Intel shareholders who have been patient through years of underperformance and heavy investment in the foundry business, this may not be an opportune time to cash out. Handing over manufacturing to TSMC could mean missing out on a possible resurgence, while the chip business could also miss out on a potential reversal in the CPU market. Intel stock trades at about $27 per share currently or just a little over 22x consensus 2025 earnings, which is reasonable in our view. We value Intel stock at about $27 per share, roughly in line with the market price.  See our analysis of Intel’s valuation for a closer look at what’s driving our price estimate for Intel.

[1] Returns as of 2/19/2025
[2] Cumulative total returns since the end of 2016

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