*

Intel's ( INTC ) revival could ease US scrutiny on foreign rivals,

say

analysts

*

Intel-Nvidia deal poses a longer-term threat to Asian

chipmakers, they say

*

TSMC shares finish down 1.6%, Samsung down 1%

By Wen-Yee Lee and Hyunjoo Jin

TAIPEI/SEOUL, Sept 19 (Reuters) - Nvidia's ( NVDA ) $5

billion investment in Intel ( INTC ) is a double-edged sword for

Asian chipmakers such as TSMC as an Intel ( INTC ) revival

could ease U.S. scrutiny on its foreign rivals although it can

boost competition in the long term.

The world's most valuable company announced the equity

investment on Thursday, which will make it one of Intel's ( INTC )

biggest shareholders with a roughly 4% stake. The two companies

agreed to jointly develop PC and data center chips.

The deal was welcomed warmly by Intel ( INTC ) investors, who

propelled its shares 23% on the news. Analysts expect the Nvidia ( NVDA )

partnership to help the struggling chipmaker make up some ground

in artificial intelligence and boost its manufacturing

capabilities.

For Taiwan's TSMC, which even now accounts for an

overwhelming majority of all AI chips that roll out of U.S.

companies, according to some estimates, an Intel ( INTC ) that is

chugging along is a better proposition than one that fails, said

analysts.

"If Intel ( INTC ) were to fall, it would only mean TSMC gets even

more market share, leaving 90% of the burden of U.S.

semiconductor manufacturing on TSMC," said Luke Lin, senior

analyst at research firm DIGITIMES in Taiwan.

"Having a competitor survive is actually a good thing for

TSMC, because it eases U.S. pressure on the company. The U.S.

would have another target (Intel ( INTC )) to support, and that would

allow TSMC to move at its own pace."

TSMC and other Asian chip powerhouses such as South Korea's

Samsung Electronics ( SSNLF ), which contract-manufacture AI

chips for their clients, are building multi-billion dollar

plants in the U.S., as they are under pressure from the

administration of U.S. President Donald Trump to manufacture in

the U.S. or face stiff penalties on imported chips.

That could make U.S. chip designers even more dependent on

them and attract greater attention from the government.

Asian chipmakers' shares were by and large steady on Friday,

with TSMC falling 1.6% and Samsung dropping 1%, slightly

underperforming the broader market.

LONGER TERM THREAT

The Nvidia ( NVDA ) deal could put Intel's ( INTC ) next-generation

manufacturing technology on a stronger footing, helping it

revive its fortunes after years of turnaround efforts failed to

pay off.

Intel ( INTC ) warned in July that it may have to get out of the chip

manufacturing business if it does not land external customers to

make chips in its factories.

While the new agreement will not involve Intel's ( INTC ) contract

chip manufacturing business making computing chips for Nvidia ( NVDA ),

some investors expect their partnership could one day develop

into manufacturing deals, potentially a threat to TSMC which

currently manufactures Nvidia's ( NVDA ) flagship processors.

"Intel ( INTC ) will eventually get its foundry business off the

ground, but it will take time to build it out to scale," said

Dan Nystedt, vice-president at TriOrient, an Asia-based private

investment firm.

"Clearly, the U.S. government wants Intel ( INTC ) to become a

manufacturer of cutting-edge semiconductors again, as a matter

of national security," he said.

Moon Joon-ho, an analyst at Samsung Securities, said the

partnership is "definitely bad news for Intel's ( INTC ) competitors" as

the deal raises the prospect of Intel ( INTC ) improving its

competitiveness and the possibility of Nvidia ( NVDA ) outsourcing chip

manufacturing to Intel ( INTC ).

But the more immediate concern for TSMC could be a loss of

business from AMD, which competes with Intel ( INTC ) and Nvidia ( NVDA )

for supplying chips to data centers, some analysts said.

"The biggest victim will be AMD... For Nvidia ( NVDA ), AMD is a

competitor, so it is essentially pulling Intel ( INTC ) in to fight

against AMD," Lin said, adding TSMC's server CPU orders from AMD

may decline as a result.

TSMC and Samsung declined to comment.

An AMD spokesperson said earlier the company would keep

driving market share growth with its AI-forward strategy.

How the chipmaking landscape will develop is far from clear.

"We'll have to see how it plays out. Just putting money in

doesn't automatically make a company stronger," said Han

Kyu-min, director at the Korea Fabless Industry Association.

"Intel ( INTC ) needs to catch up to TSMC in terms of manufacturing

capabilities. At the end of the day, whatever Nvidia ( NVDA ) develops,

it still has to go to TSMC or hopefully in the future, Samsung

Foundry."