Intel vs. TSMC: Intel Is Winning an AI Battle Against TSMC That Few Investors Are Watching

It is not often that TSMC (TSM) takes cues from Intel (INTC), but that is undoubtedly what's happening. According to The Information , the world's largest contract chipmaker is quietly building a new packaging technology modeled on Intel's EMIB. TSMC's own engineers are reportedly calling the project "EMIB-like" in-house. The company is developing it with a Taiwanese substrate maker, Kinsus Interconnect Technology. Following the report, TSMC's U.S.-listed shares rose about 8%, while Intel climbed roughly 11% on July 30. For a company that usually defines the industry's direction, TSMC borrowing ideas from Intel is worth a closer look.

The fight is all about how chips get packaged. TSMC's main method, CoWoS, uses a large and expensive silicon layer to link chips together. Intel's EMIB takes a leaner route, embedding tiny silicon bridges only where the chips actually connect. That makes it cheaper and potentially better suited to the increasingly large AI chip designs. The timing makes this sting more for the Taiwanese company. TSMC's CoWoS is sold out into 2027, with some customers waiting well over a year. That backlog is pushing buyers to look for alternate suppliers, and Intel is ready. Its newest version, EMIB-T, recently hit a 98% yield rate, matching CoWoS in that metric, and has already drawn interest from Google (GOOG) (GOOGL), Amazon (AMZN), and Nvidia (NVDA). Every customer who leaves over the wait chips away at TSMC's lead.

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For Intel, this is a rare moment of strength. Its foundry turnaround has been slow, and outside customers still bring in very little. Intel's foundry earned just $293 million from external clients last quarter, a sliver of the $5.8 billion the unit made overall, with the rest coming from Intel itself. But packaging gives Intel a genuine opening. If big customers come for EMIB, they may stay for Intel's chipmaking too, which is where the real money is. TSMC clearly sees that risk, and its Kinsus project is the answer. It is worth noting that TSMC already uses silicon-bridge technology in one version of CoWoS, so the Kinsus effort may be as much about adding cheaper capacity as copying a rival. Either way, the message is the same. Packaging has become the next big battleground in the AI chip race. TSMC still holds a commanding lead across the board. But for once, Intel is the one setting the pace in a corner of the market that suddenly matters a great deal.

Both stocks look expensive right now, but for very different reasons. TSMC trades at a forward price-to-earnings (P/E) of 23.95x, a modest 8% above its 5-year average. Its forward price-to-sales (P/S) ratio of 11.62x is much steeper, sitting roughly 46% above its historical average. That premium is defensible, though, with the EPS outlook and the company's balance sheet. Analysts expect a growth of 58% in 2026 and then slowing down but remaining at a healthy 28-30% growth through 2028. The balance sheet shows the company holding around $80 billion in net cash. Investors are paying up for a business that clearly earns it.

Intel is the harder one to judge. Its forward P/E is not meaningful, since the company is barely profitable right now. That leaves the P/S ratio of 7.22x, which sits a striking 145% above its 5-year average. The EPS growth looks enormous on paper, starting with 261% in 2026, though that partly reflects how low Intel's current earnings are. Like TSMC, Intel is expected to slow from there while still posting strong growth. The company's EPS growth is expected to improve each year from 2027 to 2029, going from 34% in 2027 to 44% in 2028 to 66% in 2029. In contrast to TSMC's strong cash pile, Intel carries roughly $21 billion in net debt. In terms of market cap, TSMC is over 4 times larger than Intel.