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Samsung surges after Intel said to consider chip outsourcing

Samsung Electronics Co. rose the most in almost 10 months after Intel Corp. was said to be considering asking the South Korean giant and Taiwan Semiconductor Manufacturing Co. to make some of its most sophisticated chips, a major departure for the Silicon Valley pioneer.

Samsung Electronics Q3 net profit leaps
Samsung Electronics Q3 net profit leaps (REUTERS)

Samsung Electronics Co. rose the most in almost 10 months after Intel Corp. was said to be considering asking the South Korean giant and Taiwan Semiconductor Manufacturing Co. to make some of its most sophisticated chips, a major departure for the Silicon Valley pioneer.

After successive delays in its chip fabrication processes, Santa Clara, California-based Intel has yet to make a final decision less than two weeks ahead of a scheduled announcement of its plans, according to people familiar with the deliberations. Any components that Intel might source from Taiwan wouldn’t come to market until 2023 at the earliest and would be based on established manufacturing processes already in use by other TSMC customers, said the people, asking not to be identified because the plans are private.

Intel is still holding out hope for last-minute improvements in its own production capabilities. Talks with Samsung, whose foundry capabilities trail TSMC’s, are at a more preliminary stage, the people said. TSMC and Samsung representatives declined to comment. An Intel spokesperson referred to previous comments by Bob Swan, the company’s chief executive officer.

Swan has promised investors he’ll set out his plans for outsourcing and get Intel’s production technology back on track when the company reports earnings Jan. 21. The world’s best-known chipmaker has historically led the industry in advanced manufacturing techniques, essential for maintaining the pace of performance increases in modern semiconductors. But the company has suffered years-long delays that have put it behind competitors that design their own chips and contract TSMC to do the manufacturing.

Intel shares slid 1% Friday. Samsung soared more than 9% to an all-time high in Seoul Monday, the biggest gain since March on an intraday basis. TSMC, which is already operating at full throttle and may not have spare capacity in the short run, stood largely unchanged in Taipei after a 7-day wining streak.

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