Speculation about a potential foundry partnership between Intel (INTC, Financials) and Taiwan Semiconductor (TSM, Financials) has surfaced, but Citi analyst Christopher Danely remains doubtful about its viability, citing fundamental operational and cultural challenges.
Danely listed three main reasons he thinks the cooperation will go sour. First, he pointed out that Intel staff members would have to follow commands from Taiwan Semiconductor workers, therefore fostering operational and cultural strife. Second, he said that the two organizations have distinct production process ecosystems, which calls for Intel staff to adjust to whole fresh approaches. Finally, he underlined variations in work cultures, stressing that Intel staff members would have to adapt to Taiwanese working circumstances including expectations of living close to the plant and being on-call around-hours.
Citi maintains a Neutral rating for Intel despite debates over its foundry strategy; Danely reiterates his opinion that the firm should leave the foundry industry and concentrate on its primary microprocessor activities.
Intel has battled to keep up with other world foundries like Taiwan Semiconductor. Intel Foundry's most recent quarter saw $4.5 billion in sales, mostly from internal chip manufacturing. To expand its foundry business, Intel revealed in September intentions to produce certain chips for Amazon (AMZN, Financials). In artificial intelligence chip manufacture, the business faces competition from Samsung (SSNLF, Financials) and Taiwan Semiconductor.
While Samsung plays a lesser part, Taiwan Semiconductor is still the top producer of artificial intelligence processors. Operating a manufacturing facility in Arizona, the business is apparently in talks with Nvidia (NVDA, Financials) to produce its Blackwell GPUs at the location.
