Intel is once again rumored to be outsourcing some of its chip production to TSMC, reports Taiwan Commercial Times (via Seeking Alpha). Following the recent delay of the 7nm process, the company is said to be targeting an order for 180,000 wafers from a Taiwanese semiconductor company using the 6nm process node.

Now, before I proceed, I am usually hesitant to mention articles that claim Intel is outsourcing major chip production to third parties. Such stories come up every couple of months and have been going on for years, but so far Intel has never outsourced a significant amount of production from anything other than its own factories.

But Intel's policy on this matter has always been that outsourcing some products is not unusual, at least that is what an Intel representative told me in 2018. And this rumor arrives at a time when Intel has been forced to admit defeat in its semiconductor manufacturing division.

Intel CEO Bob Swan recently announced that the 7nm process node will be delayed by six months. CEO Swan confirmed a "contingency plan to hedge against further schedule uncertainty," including the use of third-party factories to appease shareholders.

"To the extent that we need to use someone else's process technology and call such a contingency plan, we will be ready to do it," Swan said.

With such an important explanation, it is certainly worth discussing that rumors of Intel buying some chip demand from TSMC suddenly appeared just days after Intel's investment. The rumored deal is for Intel to buy 180,000 wafers of the company's 6nm process node (itself an optimization of the 7nm process node).

The oft-rumored move would see Intel add AMD and Nvidia to TSMC's roster of customers; TSMC is one of the largest contract semiconductor companies in the world and the largest pure foundry. It currently supplies most of AMD's lineup, including Zen 2 CPUs and RDNA GPUs, as well as Nvidia's Turing GPUs. There is no precise information on which chips Intel is considering outsourcing, but it is unlikely that any of them will require the advanced packaging technology that Intel has been touting recently.

However, the reports are highly speculative, and neither TSMC nor Intel has confirmed or denied (or will deny) that such a deal has taken place. Similarly, analysts at Sanford C. Bernstein last week claimed that TSMC does not have excess production capacity for Intel.

In any case, TSMC's stock price is already up nearly 10% today alone. Meanwhile, Intel's stock price has been holding steady after plunging nearly 17% after its most recent earnings announcement. Even if this rumor is untrue, which I am naturally attracted to this possibility, the fact that TSMC is a viable option for Intel brings immediate benefits.