It has been revealed that Intel Chairman Frank Yeary attempted to sell Intel Foundry, the company’s chip manufacturing arm, to Taiwan-based TSMC or spin it off into an independent entity. The process ultimately ended with opposition from Lip-Bu Tan, who became CEO in March of this year.

Intel management attempted to sell the factories to TSMC

The Wall Street Journal, which obtained information from Intel insiders, reported that some board members supported Yeary’s plan, but the resulting disagreements created significant tensions within the board.

These conflicts within the board have delayed strategic projects Tan wanted to launch upon his appointment. While Tan continues to enjoy corporate support, pressure for his leadership position is increasing, both internally and externally. This division within the board is said to have created uncertainty regarding Intel’s manufacturing and investment policies.

In the early months of the year, the idea of spinning off Intel Foundry into an independent company that would include companies such as TSMC, Broadcom, and Nvidia was floated. An alternative scenario envisioned Intel selling this manufacturing arm, either in whole or in part, to TSMC. Both ideas were raised by former investment banker Frank Yeary.

However, CEO Lip-Bu Tan vehemently opposed these proposals. Tan argued that Intel’s preservation of its own manufacturing capabilities was essential for both the company’s competitiveness and the security of the US semiconductor supply chain.

TSMC distanced itself from these plans on technical and commercial grounds. From a technical perspective, Intel’s lack of complete mastery of EUV-based manufacturing processes has raised concerns about potential production efficiency and performance issues if TSMC were to acquire these assets.

While both companies work with the same equipment manufacturers, there are significant differences in the machine setups, calibrations, and process settings. This increases the risk of technical incompatibilities in a potential acquisition.

From a commercial perspective, TSMC has stated that it is not willing to support a direct competitor. It is thought that Intel’s current EUV capacity may be insufficient for both its own projects and potential TSMC customers.