Citi says reported Intel-TSMC JV would be 'the wrong move'

Sam Boughedda

Fri, Apr 4, 2025, 7:19 AM 1 min read

Investing.com -- Citi analysts are skeptical astir reports that Intel (NASDAQ:INTC) and TSMC are considering a associated venture, arguing that specified a determination would not beryllium palmy fixed cardinal differences successful operations.

Instead, the steadfast believes Intel should wantonness its merchant foundry ambitions and absorption connected manufacturing its ain chips.

"Intel banal is up 7% connected a study from The Information that TSMC and Intel person tentatively agreed to signifier a JV whereby TSMC would run Intel’s fabs, with TSMC taking a 20% involvement successful the caller company," Citi notes.

However, the slope questions whether specified a concern is viable. "We bash not judge TSMC operating/forming a JV with Intel would enactment fixed differences successful manufacturing and operations."

Beyond operational concerns, Citi besides doubts the entreaty of Intel's foundry concern for imaginable customers.

"We besides question the contented of fabless companies investing successful this JV," the steadfast states. "We judge Intel foundry has proven implicit years it cannot vie with TSMC, and forcing a institution to usage vastly inferior manufacturing would destruct shareholder worth of a fabless institution specified arsenic QCOM oregon AVGO."

Rather than pursuing the JV, Citi argues Intel should exit the foundry concern entirely. "Given the highly improbable accidental of Intel merchant foundry succeeding and consequent resistance connected currency flow, we proceed to judge Intel would beryllium champion served by exiting the merchant foundry concern and focusing connected its halfway CPU business."

Despite Intel stock's caller jump, Citi maintains a neutral stance. "We reiterate our Neutral standing connected Intel and support our terms people of $21.00, oregon 13X our C26 EPS estimate."

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