What if Apple suddenly announced they'd be licensing their iOS to Samsung? Or if Google decided to partner with Microsoft to build the next Windows? Such collaborations between fierce competitors would send shockwaves through the tech industry.
That's exactly the kind of industry earthquake we're witnessing with the preliminary agreement between Intel and Taiwan Semiconductor Manufacturing Company (TSMC). These semiconductor giants—longtime rivals with fundamentally different business models—are reportedly discussing a joint venture that could reshape the chip manufacturing landscape.
For association leaders, this unexpected partnership offers valuable insights about specialization, adaptability, and the strategic value of focusing on core strengths. Let's explore what's happening and what it means for your organization.
The Semiconductor Landscape: A Brief History
First, let's establish some context. What exactly are semiconductors? A semiconductor is a material that has electrical conductivity between that of a conductor (like metal) and an insulator (like glass). These materials—usually silicon—form the foundation of modern electronics. When precisely engineered with various elements added to them, they become the microchips that power everything from your smartphone to supercomputers and AI systems. While most of us don't think about these tiny electronic components, they're the building blocks enabling digital transformation.
For decades, the semiconductor industry has operated under two competing business models:
- The Integrated Device Manufacturer (IDM) Model: Companies like Intel both design and manufacture their chips in their own factories (called "fabs"). They control the entire process from concept to finished product.
- The Fabless/Foundry Model: This approach separates design from manufacturing. Fabless companies like Nvidia, AMD, Apple, and Qualcomm focus exclusively on designing chips, while foundries like TSMC specialize in manufacturing those designs.
In the late 1990s and early 2000s, a major industry shift began as companies increasingly chose the fabless route, focusing their resources on design while outsourcing manufacturing to specialized foundries. This reduced capital requirements dramatically (as modern chip fabrication plants cost tens of billions of dollars) and allowed for faster innovation cycles.
Intel, however, maintained its traditional IDM model, continuing to both design and manufacture its own chips. While this offered certain advantages, Intel increasingly struggled to keep pace with the specialized manufacturing capabilities of companies like TSMC.
The Intel-TSMC Joint Venture
Now comes the surprising development: Intel and TSMC—companies representing these fundamentally different approaches—have reportedly been discussing a partnership. According to recent reports, TSMC would take a 20% stake in Intel's U.S.-based chip fabrication facilities, with Intel and other U.S. investors controlling the remaining shares.
This represents a seismic shift in the semiconductor landscape. Intel, which has faced technological setbacks and significant financial challenges (reporting a staggering $18.8 billion loss in 2024 while TSMC logged profits around $35 billion), appears to be acknowledging the need for a strategic pivot.
The essence of this deal isn't just financial investment. TSMC would also provide manufacturing expertise and training for Intel employees—effectively sharing the specialized knowledge that has made them the world's dominant foundry.
The Power of Focusing on Core Strengths
This partnership highlights a fundamental business principle: sometimes, trying to excel at everything dilutes your ability to be truly exceptional at anything.
TSMC's rise to dominance came through relentless focus on manufacturing excellence. They didn't design chips; they just made them—better than anyone else. This laser focus allowed them to develop what Hamilton Helmer calls "Process Power" in his book 7 Powers: The Foundations of Business Strategy—specialized expertise so deeply embedded in their operations that it can't easily be replicated.
Intel, despite its historical strengths and near-monopoly in certain markets, struggled to maintain excellence across both design and manufacturing as the industry evolved. The manufacturing process became increasingly specialized and capital-intensive, requiring a level of focus that was difficult to maintain while simultaneously pushing the boundaries of chip design.
The business principle that you can only do one thing exceptionally well extends far beyond the semiconductor industry—it's a reality that many organizations, including associations, must confront.
PS. If you find this topic as interesting as we do, check out the Acquired Podcast episodes on TSMC and Intel.
Takeaways for Association Leaders
The Intel-TSMC partnership offers several valuable lessons for association leaders:
1. Specialization creates strategic advantage
Just as TSMC gained dominance through specialization, associations should consider whether trying to excel at everything is diluting your ability to deliver exceptional value in your most important areas.
Consider what core functions truly differentiate your association and create the most value for members. Are there elements of your operation that might benefit from more specialized focus or partnership?
2. Be willing to challenge your core identity
Intel's identity was deeply rooted in being both a designer and manufacturer of chips. The company's pride in its manufacturing prowess made it difficult to pivot when industry trends shifted. For associations, similar identity attachments can become obstacles to necessary adaptation.
Consider whether your association is holding onto certain functions or approaches not because they create the most value for members, but because "that's how we've always done it" or because they're tied to your organizational identity.
3. Focus on what directly improves your value proposition
A useful framework: rigorously assess which activities directly contribute to your core value proposition and which ones are secondary or supporting functions. The secondary functions might be candidates for partnership or outsourcing.
For associations, this means evaluating which activities directly enhance member value and which might be handled more effectively through partnerships or external providers.
4. Anticipate future member needs
The most important question association leaders should ask isn't "What do we need to improve about our current offerings?" but rather "What will our members need from us two years from now?"
The key is looking beyond your current services to anticipate where your industry is headed. What will people in your sector need from your association in the near future? Figure that out, and then build toward that vision.
5. Consider whether your competitors might make valuable partners
Sometimes your fiercest competitors in one area might be your most valuable partners in another. Just as Intel and TSMC are finding common ground despite their rivalry, associations should consider whether certain collaborations—even with organizations they've traditionally viewed as competitors—might create more value for members.
This could include everything from shared technology platforms to joint educational programs or research initiatives.
Staying Adaptable in a Changing World
When companies that seemed unassailable—like Intel with its decades-long dominance—need to fundamentally reconsider their business models, it serves as a reminder that no organization is immune to disruption.
The most successful organizations today combine deep specialization in core areas with strategic flexibility and openness to unexpected collaborations. They're willing to challenge their identities and ask hard questions about what truly drives value.
For association leaders, the Intel-TSMC partnership offers this opportunity: look beyond your current operations and ask whether your association might be the Intel of your industry—historically dominant but potentially missing opportunities to adapt. Or whether there might be TSMC-like partners who could help you deliver greater value through their specialized capabilities.
Though Apple licensing iOS to Samsung may seem unthinkable today, the Intel-TSMC partnership demonstrates that competitor collaborations become feasible when strategic needs align with specialized expertise. The willingness to form unexpected alliances might be exactly what keeps your association at the forefront of your industry.
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