Desperate measures to save Intel: US reportedly forcing TSMC to buy 49% stake in Intel to secure tariff relief for Taiwan

[sonchoy]

"The current US administration, led by President Donald Trump, has employed trade tariffs as the primary way to reduce the US's trade deficit with partner countries. However, the US tariff policy has been erratic and unpredictable. These tariffs have also affected Taiwan, one of the US’s biggest trading partners.

Currently standing at 20%, the US trade tariff on Taiwan is more than that of countries like Japan, which pays a baseline tariff of 15%. Unsurprisingly, a 20% levy on Taiwanese exports to the US will hurt Taiwanese businesses quite a bit, which is why the country needs to negotiate further with the US to bring the tariffs down or downright eliminate then. However, according to a new report out of Taiwan, US President Trump has presented Taiwan with two conditions for tariff relief, both of which are quite stringent.
Per the Taiwanese outlet mnews.tw, an industry source told the publication that President Donald Trump has mandated TSMC fulfill two conditions if Taiwan is to see any tariff reduction:

1. Buy a 49% stake in Intel
2. Invest a further $400 billion in the US

While ignoring the industrial ramifications of TSMC owning 49% of Intel, these are humongous financial commitments. TSMC is already investing a ton of money in the US, with one of the company’s fabs achieving volume production in 2024. The Taiwanese giant is on its way to building two more fabs at its Arizona facility, alongside an R&D Center and a packaging facility. Overall, TSMC has planned to invest a total of $165 billion in the US.

So, President Trump’s alleged condition of investing a further $400 billion in the US alongside buying a stake in Intel seems improbable from a purely financial standpoint.

The US is trying to save Intel from collapse​

Intel is on the decline. From the company’s fab operations to consumer products, virtually every Intel department is taking a hit. This has shown in the company’s reported annual revenue figure, which has come down from a high of $79 billion in 2021 to $53 billion in 2024, is a massive 33% reduction.
Intel is a vital part of the US’s plans regarding domestic semiconductor manufacturing. As such, the company has already received billions in federal grants. However, this funding has not solved Intel’s troubles, as the company has delayed its Ohio fab from an initial target of 2025 to 2030/31. A primary reason for this delay seems to be Intel’s efforts to preserve capital resources amidst a lack of significant help from the US CHIPS Act and outside partners.
In short, the US administration seems to be pressuring TSMC to acquire a considerable stake in Intel to inject some much-needed capital into the company and keep the US government's plans of a domestic chip supply chain afloat. However, TSMC is unlikely to agree to this proposal.

It'd be interesting to see what happens to Intel the coming months. Intel has a few exciting products in the works with Panther Lake and Nova Lake CPUs. So, things could improve for Team Blue if these products deliver."

Desperate measures to save Intel: US reportedly forcing TSMC to buy 49% stake in Intel to secure tariff relief for Taiwan

A new report out of Taiwan has revealed that the current US administration is tying the reduction on trade of trade tariffs on Taiwan to significant TSMC investment in the US. This investment includes a 49% stake in Intel.

www.notebookcheck.net

 

[sonchoy]

Another rumor? I don't know but the Semi tariffs are coming next week per Trump, so this may have some legs.

 

[Daniel Nenni]

In an exclusive interview with CNBC on the 5th, US President Trump said he expected to announce semiconductor tariffs within the next week, and he again mentioned TSMC. Since Trump took office, TSMC has announced an additional $100 billion investment in the US, bringing its total investment in the country to $165 billion. Recently, it was reported that Trump has set two conditions for reducing tariffs on Taiwan, one of which is an additional $400 billion in investment, primarily to target TSMC for increased investment in the US.

U.S. President Trump: "We're going to make an announcement soon on semiconductors and chips, which is another category because we want them made in the United States. By the way, they are being made in the United States. We have the largest (semiconductor) company in the world. Taiwanese companies are investing $300 billion in Arizona to build the world's largest chip and semiconductor factory."

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www.mnews.tw

 

[Barnsley]

With regards to semicon, what are the replacement goods available in the US to replace the best TSMC can offer?

A 20% tariff is just a 20% price increass to whomever is buying as there is nothing to replace them.

 

[sonchoy]

With regards to semicon, what are the replacement goods available in the US to replace the best TSMC can offer?

A 20% tariff is just a 20% price increass to whomever is buying as there is nothing to replace them.

I don't think it's 20% for Semis. Semis are under Section 232 investigation, which means there's no negotiation once the tariff is announced. Same as Pharma as far as I understand. They start somewhere around 50% and go up every few months.

I get the point though...20% or 50%...someone will have to eat the cost.

This may be the incentive to nudge US Fabless to use IFS going forward.

 

[siliconbruh999]

i think this is another hit piece from Media

 

[hist78]

i think this is another hit piece from Media

Another hit piece from Media or from Mafia?

 

[sonchoy]

That $400B # may have legs; I just heard Trump telling CNBC "Biggest from Taiwan (i.e. TSMC) will be investing $300B in Arizona" at 17:30 mark.

Now AZ TSMC direct investment totals $165B so far. So where is the rest $135B going? TSMC building even more fabs in AZ or Joint-venture with Intel? Intel's 18A fabs are in AZ.

 

[Fred Chen]

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www.mnews.tw

A major electronics industry boss told this publication that the 20% tariff figure reached in the Taiwan-US reciprocal tariff negotiations was not surprising, as Taiwan's trade deficit with the US last year was higher than that of Japan and South Korea, demonstrating Trump's relentless approach to tariffs. A source familiar with the situation revealed that if Taiwan wants to achieve the same 15% tariff as Japan and South Korea, Trump has two conditions: one is that TSMC acquire a 49% stake in Intel, and the other is that it invests an additional $400 billion. Both of these demands are extremely difficult for TSMC Chairman Wei Zhejia.

Seeing the 20% tariff figure has left many export business owners distraught. "After all this time, it's still higher than Japan and South Korea, and even higher than the 19% tariffs in Thailand and Indonesia. This is truly dismal. Besides the 5% increase in tariffs, the exchange rate has recently appreciated by 10%, resulting in a 15% gap. Taiwan's industries will be very hard hit," said a senior executive of a major conglomerate, shaking his head. "Although the 20% increase is temporary, subsequent adjustments will depend on what leverage Taiwan has in negotiations with the US. A 5% difference is hugely damaging," said Hsu Shu-po, chairman of the Taiwan Chamber of Commerce, more bluntly.

Our investigation reveals that the biggest obstacle in the current negotiations between Taiwan and the US lies with TSMC, the patron saint of the nation. "From the beginning, semiconductors, and especially TSMC, have been Trump's top priority!" a tech industry veteran bluntly stated. "Whether Taiwan can offer terms that satisfy Trump still depends on TSMC Chairman Wei Zhejia."

Last year, Taiwan's trade deficit with the United States was $73.9 billion, higher than Japan's $68.5 billion and South Korea's $66 billion. This has made negotiations with the US more difficult, and the US has been pressuring Taiwan to do more. "Recently, there were reports that Trump was demanding TSMC acquire a 49% stake in Intel and even invest an additional $400 billion in the US. These are things Wei Zhejia simply can't agree to," said a major listed company CEO, shaking his head.

In particular, the two conditions that Trump wants most are not something the government can decide, because the National Development Fund only holds 6.38% of TSMC's shares. Wei Zhejia is the key figure who has the power to decide whether TSMC should help Intel and expand its investment in the United States.

Chen Huiming, a veteran semiconductor analyst and managing partner of Hong Kong's Juxin Capital, bluntly stated, "Of course, this is unacceptable. First, the EU has only invested $600 billion in the United States. Why should the future of a private company be jeopardized by politics? TSMC is a national patriot. We must maintain its competitiveness as much as possible. It is a guarantee of Taiwan's security. Thinking long-term, Trump's term may only last three years."

"TSMC's $165 billion investment in the US was already given away. Trump naturally wants more this time. Whether it's agriculture, automobiles, or health foods, even if Taiwan gave up everything, plus purchases of oil, natural gas, aircraft, and arms, it wouldn't compare to the largest trade deficits in semiconductors and ICT," a senior tech industry analyst said. "Trump's primary concern is the US-China confrontation, and mastering semiconductor and AI technology is paramount. Setting up factories in the US is just the beginning; the US ultimately needs to control key technologies."

 

[blueone]

U.S. President Trump: "We're going to make an announcement soon on semiconductors and chips, which is another category because we want them made in the United States. By the way, they are being made in the United States. We have the largest (semiconductor) company in the world. Taiwanese companies are investing $300 billion in Arizona to build the world's largest chip and semiconductor factory."

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www.mnews.tw

I smell political rhetoric. The TSMC AZ fabs are small compared to TSMC TW gigafabs. Like 50,000 wafers per month for the two AZ fabs combined compared to about 1.4 million wafers per month for total TW capacity. I've read TSMC TW capacity is expected to expand by 60,000 wafers per month for 2nm process, which if correct is bigger than the entire AZ site.

I find it difficult to believe that with all of the expert consultants available to the Trump Administration they would actually be so clueless about the realities of TSMC US production. Of course, the alternative is that they know, and they're so cynical about Congress and the US public that they let Trump say whatever comes to his wild imagination. I think I'd rather have cynicism than cluelessness.

I think Elon Musk might be correct. It looks like there's no choice. Sane people just have to migrate to another planet.

 

[Daniel Nenni]

Complete nonsense:

"An industry source told the publication that President Donald Trump has mandated TSMC fulfill two conditions if Taiwan is to see any tariff reduction:

• Buy a 49% stake in Intel
• Invest a further $400 billion in the US"

TSMC investing in Intel will not help Intel. TSMC investing another $400B in the US will not help Intel. Hopefully the next rumor will be how the US will help Intel. Lip-Bu has laid down the gauntlet. Either someone steps up as a big customer/partner or Intel will stop investing in US semiconductor manufacturing. Are you politicians listening? How about Apple, Qualcomm, Broadcom, etc... Are you listening?

 

[tedc]

It's hard to believe an "America First" President would push for foreign ownership of the crown jewel of American semiconductor manufacturing.

And you have to wonder where these numbers are coming from: $400B is half of Taiwan's GDP, while a 49% stake in Intel is $44B. That's a small price to pay to permanently cripple a competitor once and for all. This clearly wasn't thought through; the incentives don't align at all.

And what are we even using all this newly-collected tariff money for anyway? Where is CHIPS Act 2.0 to fund strategic investments? The silence is deafening.

 

[hist78]

Complete nonsense:

"An industry source told the publication that President Donald Trump has mandated TSMC fulfill two conditions if Taiwan is to see any tariff reduction:

• Buy a 49% stake in Intel
• Invest a further $400 billion in the US"

TSMC investing in Intel will not help Intel. TSMC investing another $400B in the US will not help Intel. Hopefully the next rumor will be how the US will help Intel. Lip-Bu has laid down the gauntlet. Either someone steps up as a big customer/partner or Intel will stop investing in US semiconductor manufacturing. Are you politicians listening? How about Apple, Qualcomm, Broadcom, etc... Are you listening?

Based on what I've read from multiple sources, this rumor isn't entirely baseless. At least, the negotiation direction seems to be heading that way.

This kind of approach is not only nonsense but also outright stupid. It would kill any chance of Intel remaining independent and could even trigger a revolt among TSMC shareholders, putting Intel in an even worse limbo.

 

[sonchoy]

It's hard to believe an "America First" President would push for foreign ownership of the crown jewel of American semiconductor manufacturing.

And you have to wonder where these numbers are coming from: $400B is half of Taiwan's GDP, while a 49% stake in Intel is $44B. That's a small price to pay to permanently cripple a competitor once and for all. This clearly wasn't thought through; the incentives don't align at all.

And what are we even using all this newly-collected tariff money for anyway? Where is CHIPS Act 2.0 to fund strategic investments? The silence is deafening.

Actually the 49% rumor will not give TSMC any voting control of Intel. See below from Trump's executive order from Feb 21, 2025.

"(h) The United States will continue to welcome and encourage passive investments from all foreign persons. These include non-controlling stakes and shares with no voting, board, or other governance rights and that do not confer any managerial influence, substantive decision making, or non-public access to technologies or technical information, products, or services. This will allow our cutting-edge businesses to continue to benefit from foreign investment capital, while ensuring protection of our national security."

America First Investment Policy

MEMORANDUM FOR THE SECRETARY OF THE TREASURY THE SECRETARY OF STATE THE SECRETARY OF DEFENSE THE ATTORNEY GENERAL THE

www.whitehouse.gov

If it pans out, it'll be a equity stake with rights to profits only.

 

[KevinK]

Now AZ TSMC direct investment totals $165B so far. So where is the rest $135B going? TSMC building even more fabs in AZ or Joint-venture with Intel? Intel's 18A fabs are in AZ.

Trump and Elon are like the guy in the Monty Python skit about buying a bed - you have to divide everything by 2-10 to get the real value of the deal..

 

[hist78]

Actually the 49% rumor will not give TSMC any voting control of Intel. See below from Trump's executive order from Feb 21, 2025.

"(h) The United States will continue to welcome and encourage passive investments from all foreign persons. These include non-controlling stakes and shares with no voting, board, or other governance rights and that do not confer any managerial influence, substantive decision making, or non-public access to technologies or technical information, products, or services. This will allow our cutting-edge businesses to continue to benefit from foreign investment capital, while ensuring protection of our national security."

America First Investment Policy

MEMORANDUM FOR THE SECRETARY OF THE TREASURY THE SECRETARY OF STATE THE SECRETARY OF DEFENSE THE ATTORNEY GENERAL THE

www.whitehouse.gov

If it pans out, it'll be a equity stake with rights to profits only.

If this is a Intel bailout plan contemplated by Trump and funded by TSMC shareholders, without TSMC gaining controlling rights, TSMC's shareholders will kill it.

 

[sonchoy]

If this is a Intel bailout plan contemplated by Trump and funded by TSMC shareholders, without TSMC gaining controlling rights, TSMC's shareholders will kill it.

Agree; I see no benefit for TSMC from this arrangement other than to beat the tariff; their cash is better used re-investing in their own business than in Intel's.

 

[tedc]

Actually the 49% rumor will not give TSMC any voting control of Intel. See below from Trump's executive order from Feb 21, 2025.

"(h) The United States will continue to welcome and encourage passive investments from all foreign persons. These include non-controlling stakes and shares with no voting, board, or other governance rights and that do not confer any managerial influence, substantive decision making, or non-public access to technologies or technical information, products, or services. This will allow our cutting-edge businesses to continue to benefit from foreign investment capital, while ensuring protection of our national security."

America First Investment Policy

MEMORANDUM FOR THE SECRETARY OF THE TREASURY THE SECRETARY OF STATE THE SECRETARY OF DEFENSE THE ATTORNEY GENERAL THE

www.whitehouse.gov

If it pans out, it'll be a equity stake with rights to profits only.

Actually, Intel is a publicly-traded company whose shares entitle you to voting rights (e.g., proposals, BOD elections, etc.). The EO can say whatever it wants; it doesn't change corporate structure.

Also, buying public shares does not provide investment capital. (That capital was generated upon IPO in 1971.)

A stake without voting rights is pretty useless. (Keep in mind, Intel isn't profitable either.) What's does the administration expect TSMC to do with Intel then?

 

[sonchoy]

Actually, Intel is a publicly-traded company whose shares entitle you to voting rights (e.g., proposals, BOD elections, etc.). The EA can say whatever it wants; it doesn't change corporate structure.

Also, buying public shares does not provide investment capital. (That capital was generated upon IPO in 1971.)

A stake without voting rights is pretty useless. (Keep in mind, Intel isn't profitable either.) What's does the administration expect TSMC to do with Intel then?

Is it possible that TSMC buys 49% of IFS instead of Intel? In that case, it won't be a public offering, right? I believe the Chips Act stipulated that Intel keep 51% control of IFS until 2030s, which also states that no third party can have more than 35% of IFS.

Whatever way a deal for IFS is structured, I don't believe it will be anything conventional. Department of Defense recently bought "Golden Share" of MP Materials (Rare Earths company), which gives DoD control over all decision-making.

 

[tedc]

Is it possible that TSMC buys 49% of IFS instead of Intel? In that case, it won't be a public offering, right? I believe the Chips Act stipulated that Intel keep 51% control of IFS until 2030s, which also states that no third party can have more than 35% of IFS.

Whatever way a deal for IFS is structured, I don't believe it will be anything conventional. Department of Defense recently bought "Golden Share" of MP Materials (Rare Earths company), which gives DoD control over all decision-making.

Stakes in a subsidiary (IFS) are still tied to the parent company (Intel). Similar to before, Intel shareholders would need to sell their stakes to let TSMC take equity in IFS. And this still wouldn't generate investment capital.

And again, with no voting rights and an unprofitable company, what really is the point here (for the US government, Intel, or TSMC)?

The DOD investment in MP Materials is a sign of commitment to supporting American rare earth metals production. Why not cut out the foreign entity and just have the US government buy equity in Intel directly?