- Trump administration officials are facilitating discussions for TSMC to potentially take a controlling stake in Intel‘s (INTC) U.S. factories to bolster American semiconductor manufacturing, although Intel’s openness to this deal remains unclear.
- The proposed partnership aims to address Intel’s financial difficulties while ensuring U.S. leadership in technology, but it faces political challenges due to concerns over foreign ownership of critical American assets.
- Despite previous reluctance, TSMC’s interest in this deal marks a shift as it aligns with Trump’s strategy to enhance domestic chip production amidst U.S.-China tech rivalry, though the exact structure of any agreement is still undetermined.
Amidst efforts to fortify American manufacturing and retain leadership in cutting-edge technology, discussions are underway at the behest of Trump administration officials for Taiwan Semiconductor Manufacturing Co. (TSMC) to potentially take a controlling stake in Intel Corp.’s U.S. semiconductor factories. This proposal, as reported by Bloomberg, aims to leverage TSMC, the world’s leading contract chipmaker for companies like Apple (AAPL) and Nvidia (NVDA), to directly manage Intel’s (INTC) facilities, addressing Intel’s recent financial struggles which have led to workforce reductions and scaled-back global ambitions. The report notes that the deal, although in its infancy, could involve significant American chip designers acquiring equity stakes alongside U.S. government support, ensuring that the venture isn’t wholly foreign-owned.
However, political sensitivities loom large over this prospective partnership, reminiscent of the challenges faced in Nippon Steel Corp.’s attempted acquisition of U.S. Steel (X). A White House official has indicated that President Trump is unlikely to endorse a scenario where a foreign company operates Intel’s factories. Despite these hurdles, both TSMC and Intel have chosen not to comment publicly on the discussions, which have seemingly provided a slight buffer to Intel’s stock performance, reducing earlier session losses (after a decline of more than 5% earlier in the session, Intel closed down 2.20% at $23.60 in New York on Friday).
Intel, once a titan in chip manufacturing, has seen its market share erode over recent years, despite its expansive production capabilities and strategic importance to U.S. interests. The company’s efforts under former CEO Pat Gelsinger to reclaim its lead in chipmaking, supported by significant government funding, have not yet translated into the expected commercial success. This has led to a reevaluation of Intel’s strategy, with the U.S. government exploring various contingency plans, including a now-defunct idea of partnering Intel with GlobalFoundries, which lacked the financial prowess for such a venture.
The current administration’s reluctance to directly broker deals, combined with TSMC’s initial disinterest in licensing its technology to Intel, has set a complex stage for any potential agreement. Yet, Trump’s proactive stance on deal-making and his administration’s focus on repatriating semiconductor production could be pivotal. TSMC, having recently held its board meeting in the U.S. for the first time, appears to be navigating these political waters carefully, aiming to maintain favorable relations with the U.S. while expanding its footprint.
The backdrop of escalating U.S.-China tech rivalry further underscores the strategic importance of this potential deal. Trump’s rhetoric on protecting and enhancing U.S. chip manufacturing, through tariffs rather than subsidies, contrasts with previous legislative efforts like the Chips and Science Act. This shift in policy approach might influence the structure and viability of any deal between TSMC and Intel, reflecting a broader strategy to ensure that America retains control over critical technologies in an era dominated by AI and advanced computing needs.
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