Intel Set for Largest Weekly Gain in 23 Years Amid AI Chip Production Drive

Intel Corp. (INTC) is poised to notch a 23% weekly gain on Friday, marking its highest since 2000. This rally is fueled by bullish remarks from US Vice President JD Vance regarding domestic AI chip production and speculation of a joint venture with TSMC (TSM).

VP Vance's Comments Spark Rally

Intel's weeklong rally began after Vance highlighted domestic chip manufacturing in an address at the AI Summit in Paris on Tuesday. He emphasized the administration's commitment to ensuring that AI in the US is built with "American designed and manufactured chips." Intel shares surged 6% following these comments.

Intel's Position in AI Chip Manufacturing

Intel remains the sole American company capable of mass-producing AI chips, contingent on the success of its recent manufacturing advancements. Despite expanding operations in the US, rivals Samsung and TSMC primarily manufacture chips in their home countries. Prominent US tech companies like Apple and Nvidia rely on TSMC for their advanced chip production.

US Focus on Domestic Chip Manufacturing

The potential Chinese invasion of Taiwan has prompted the US government to prioritize domestic chip manufacturing. Intel's stock also received a boost this week from reports suggesting that the administration is exploring options to assist Intel's turnaround by involving TSMC.

Joint Venture Speculation

A Baird analyst reported rumors of a US-funded joint venture between TSMC and Intel. According to the analyst, TSMC would provide engineering expertise to enhance Intel's manufacturing capabilities.

Analysts Express Skepticism

Wall Street analysts have expressed skepticism about such a venture, highlighting Intel's potential as a competitive threat to TSMC. Bernstein analyst Stacy Rasgon questions TSMC's motivation to license its technology to Intel and expresses concerns about Intel's ability to produce AI chips.

Despite the gains, Intel stock retreated slightly on Friday, with a 3% intraday decline. Year-to-date, the stock has risen by over 15%.