Shares of Taiwan Semiconductor (TSM 5.18%) were moving higher today even though there was no company-specific news out on the stock. Instead, investors seemed to react positively to news that Intel CEO Pat Gelsinger had retired over the weekend, apparently being pushed out after the stock had flailed under his tenure.
TSMC shares rose on the news as Gelsinger’s departure seems to signal a setback in Intel’s foundry strategy. As of 1:10 p.m. ET, Taiwan Semi stock was up 5.2%. Notably, Intel stock was also up today, gaining 3.5% at the same time.
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Why Gelsinger’s departure is good news for Intel
Gelsinger’s trademark initiative as Intel CEO had been a push to open Intel’s foundry business to outside customers, essentially mimicking TSMC’s business model. That was also key to Intel’s getting billions in funding from the CHIPS Act.
Gelsinger announced a goal of making Intel the world’s second-biggest contract chip manufacturer, behind TSMC, but that goal is now under question with Gelsinger no longer at the helm.
It’s unclear what the future of Intel Foundry Services is, but any delay in its buildout or plans is likely to benefit TSMC. In its press release announcing Gelsinger’s retirement, Intel said that the leadership structure of the foundry business is unchanged.
TSMC’s lead is safe
TSMC dominates the contract chip market with more than 50% market share of third-party chip manufacturing and around 90% of advanced chip manufacturing. Arguably, Intel was emerging as the biggest threat to the company under Gelsinger, but that threat has likely subsided.
Intel is still losing billions each quarter in the foundry business, and the next CEO might not see it as the same growth opportunity. Either way, today’s announcement from Intel is a good sign for TSMC.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short February 2025 $27 calls on Intel. The Motley Fool has a disclosure policy.
