Intel (INTC 2.17%) stock is posting gains in Monday’s trading. The semiconductor company’s share price was up 2.1% as of 1:15 p.m. ET.

Intel stock is gaining ground following comments made by Taiwan Semiconductor Manufacturing CEO Morris Chang over the weekend. Chang believes that challenges created for his company by restrictions on selling chips to China are poised to intensify. Investors are betting that this dynamic could be good news for Intel.

Pressures on Intel’s top fabrication rival could intensify

Taiwan Semiconductor Manufacturing, or “TSMC” as it’s often called, is the world’s leading manufacturer of semiconductors. While many companies design their own chips, TSMC has a dominant position when it comes to semiconductor fabrication. The company’s dominance is even more pronounced when it comes to advanced chips used for artificial intelligence (AI), telecommunications, and next-gen defense applications. As a result, the company’s services are in high demand — and the fabrication leader has become central to geopolitical considerations.

Chang said over the weekend that his company’s growth will soon face its “most severe” headwinds due to U.S. restrictions on the sale of advanced chips and semiconductor manufacturing equipment to China. Shortly after these comments were made, TSMC announced that it halted product shipments to Sophgo because its chips were being included in an AI processors build by Chinese tech leader Huawei. The U.S. has restricted imports of Huawei products, and it’s also established export restrictions that prevent technologies from being shipped and licensed to the Chinese tech company.

Challenges for TSMC could create opportunities for Intel in the fab space. On the other hand, Intel isn’t immune to challenges created by worsening relations between the U.S. and China. Earlier this year, the Chinese regulators banned the use of Intel’s processors in computers for government business — and additional challenges could arise.

What comes next for Intel?

Intel is set to publish its third-quarter results after the market closes on Oct. 31, and the report is poised to be an important one for the stock. The semiconductor company’s Q2 report arrived with sales, earnings, and guidance that fell short of the market’s expectations. Management also announced massive restructuring initiatives.

There’s a good chance that Intel will share some key details about its strategy, and its plans for the fabrication business will be under the microscope. With the company set to receive $8.5 billion in direct funding and an additional $11 billion in loans through the CHIPS and Science Act, Intel has become central to the United States’ plans to improve domestic chip fabrication capabilities. But the health and viability of the fab business have been called into question due to segment-specific issues and challenges facing the company at large. Investors will likely get a closer look at Intel’s fab strategy this Thursday.