anyone on the forum who has connections to intc government affair team, could you please fwd this idea to them?
I never say Intel Foundry was hopeless. I wrote those after the August earning.
It won't be at those numbers.... no one should pay that much for IFS. Look to IBM foundry sell off for a template for how this could work out. Also expect partial sell offs and maybe a third team involved . Going all in on Intel manufacturing and then figuring out it was a mistake is difficult to deal with..... and now you have Brookfield and Apollo contracts in the mix.
There are plenty of credits today. And all companies know how to work the game to get "RnD" credits. The government did its part. IFS still has nightmare financial issues going forward after 4 years.
Not really. The Biden admin is quite stingy to hand out R&D credits because there is no "income" to support generous payouts. What CHIPs act did was to support build, build and build, not advanced R&D. Now comes the era of tariffs. Basically if you do R&D and manufacturing outside of U.S., you are going to sponsor whoever does it inside U.S.
Tariffs are always bad. it forces people to do stupid things to avoid tariffs and customers pay. (I can list items from the supply chain "bag of tricks")
Let me explain prepay credit a bit. Imagine you were NVDA, Trump admin added a tariff of $5B annually. Now you can pay the tariff directly, or you can get credit to offset this tariff. Two sources of credit: 1) if NVDA did some chip manufacturing in the U.S. for $1B, it gets $300M credit; 2) if NVDA prepay TSMC or IFS $1B for some manufacturing work in the next 3 years, it gets $300M credit, 3) IFS and Micron does advanced R&D in the U.S., they are going to have some credit which can be sold to NVDA.
Btw, this is not to benefit any particular company, though I do expect IFS and Micron would be the largest beneficiaries. TSMC can do advanced R&D in the U.S. as well, though unlikely. It can also set up new manufacturing and assembly plants to fulfill customer-prepaid committments, which is actually likely in this scheme.
Intel is not IBM. I think the number makes sense as for TSMC to build those fabs themselves they would pay more. iPhone does not worth 1000$ but the number makes sense as it provides equivalent or higher utility for a buyer.
Unless the US concede to China in some key aspects such as lifting the embargo of EUV, it's unlikely for China to approve any deal between Intel and tsmc.I wrote about this approach on this forum after the August earnings call. At that time, I thought this approach was the cheapest for both sides. Probably no one believed it, and most viewed TSMC with a winner-takes-all perspective.
"In addition, Intel’s fab could be spun off into a new entity jointly owned by TSMC and Intel, and run by TSMC, with the new entity receiving U.S. Chip Act funding, the firm adds."
Baird notes supply chain talk of Intel fab spinoff with TSMC involved - TipRanks.com
Baird analyst Tristan Gerra says there are discussions from the Asia semiconductor supply chain that the U.S. government will get involved in potentially TSMC (TSM)...www.tipranks.com
TSM has said multiple times, they don't want Intel's fab. Geo risk may be important, but TSM also build and building 3 fabs in Arizona, with additional capacity in Japan. There is definitely less worrying about TSM as I believe. The last very proactive comment by Pat G was 'you see the enthuaisam for geographically resilient supply chain is fading'. Trump is definitely not in any interest as far as I can tell. So many deep pocket billionaire who have affilate with TSM and benefit from that relationship doesn't want the government to support Intel right away; otherwise, it wouldn't be steel but semiconductor to be announced first. Trump has in chief for some time, and his action in semiconductor policy is just slow, and he doesn't talk as much.
It is a joint-venture not acquisition.
JD spoke quite loud about it during an international AI conference yesterday.
Lets see what the valuation is. People do not like to pay a lot for other peoples fabs as assets depreciate and buyer has to take the hit. There will be some interesting accounting in these deal options (Sell is one, JV is another). You would definitely not pay the cost to build your own fab. that has literally never happened. Micron and GF were paid to take fabs (great deals by both teams).
But we need to remember the key point that TSMC would not do it if there were no tariffs. When I wrote that statement, Intel likely wanted to see it happen. However, at this moment, it might be the intent of both sides. Therefore, the calculations should reflect that.
Doesn't make sense. You would not give your house away for free to save continuing expenses. You would sell it at the maximum price that a particular buyer can afford, i.e. at his utility value. It is more so if the buyer is actively pursuing it.
If market share is high enough (eg using old definition instead of foundry 2.0), a JV may still trigger a review.
