TSMC Will Not Take Over Intel Operations

[fansink]

TSMC will not take over the chipmaking operations of struggling U.S. rival Intel, according to industry analysts.

TSMC is considering taking a controlling stake in Intel Foundry as urged by U.S. President Donald Trump’s administration, according to a Bloomberg report last week, citing one person close to the matter. A few days later, the Wall Street Journal reported that Broadcom is interested in buying Intel Products if a potential investor takes over Intel Foundry.

Intel has divided itself into two entities, with one in charge of products and the other foundry production, as the largest U.S. chipmaker aims to reverse its decline. The sudden departure of Pat Gelsinger as the CEO of Intel in December has left the struggling U.S. chipmaker adrift, still searching for a new CEO.

The Trump administration aims to revive America’s chip industry, vowing to levy tariffs on imported semiconductors just as it squeezes Taiwanese government officials to attract more investment from TSMC, which makes more than 90% of the world’s most advanced chips. The reported plan to pair TSMC with Intel will fizzle, according to Handel Jones, CEO of International Business Strategies (IBS), which advises electronics companies and investors.

“The U.S. government wants the U.S. to have large capacity in the U.S. at under 2 nanometers, and this is appropriate,” he told EE Times. “The key is the level of commitment that TSMC will make to capacity in the U.S. TSMC has no interest in the wafer-fab facilities of Intel. We talk with both companies on an almost real-time basis.”

https://www.eetimes.com/tsmc-will-not-take-over-intel-operations-observers-say/

 

[soAsian]

The Trump administration aims to revive America’s chip industry, vowing to levy tariffs on imported semiconductors just as it squeezes Taiwanese government officials to attract more investment from TSMC, which makes more than 90% of the world’s most advanced chips. The reported plan to pair TSMC with Intel will fizzle, according to Handel Jones, CEO of International Business Strategies (IBS), which advises electronics companies and investors.

https://www.eetimes.com/tsmc-will-not-take-over-intel-operations-observers-say/

Here’s a play from China’s playbook when dealing with Trump during his first term:

1. Negotiate a deal with Trump and drag it out as long as possible.

1. 2. After dragging it out for a year or two, agree to a deal that makes Trump look good.
2. 
   
3. 3. Wait him out, then tear up the deal. Remember China’s agreement to buy goods from the U.S. as part of Trump’s "historic trade deal"? Yeah, China did none of that.

Keep Trump happy, drag out the talks, agree to whatever he asks for, stoke his ego, wait out four years, and then give him the middle finger.

 

[fansink]

Here’s a play from China’s playbook when dealing with Trump during his first term:

1. Negotiate a deal with Trump and drag it out as long as possible.

1. 2. After dragging it out for a year or two, agree to a deal that makes Trump look good.
2. 
   
3. 3. Wait him out, then tear up the deal. Remember China’s agreement to buy goods from the U.S. as part of Trump’s "historic trade deal"? Yeah, China did none of that.

Keep Trump happy, drag out the talks, agree to whatever he asks for, stoke his ego, wait out four years, and then give him the middle finger.

Especially if the “TSMC vs Intel technology gap” continues to increase, so shall the level of desperation.

There doesn't seem to be any positive information to counter the implied freefall, coming from Intel.

 

[Daniel Nenni]

While I appreciate the news flurry I do not see this happening. It is beyond rhyme or reason for us insiders. The semiconductor industry needs a trusted alternative to TSMC and that is Intel Foundries. Now that the US government is dodging trillions of dollars of waste there should be money in the budget to protect our semiconductor based national security interests and make semiconductors great again, absolutely.

 

[fansink]

While I appreciate the news flurry I do not see this happening. It is beyond rhyme or reason for us insiders. The semiconductor industry needs a trusted alternative to TSMC and that is Intel Foundries. Now that the US government is dodging trillions of dollars of waste there should be money in the budget to protect our semiconductor based national security interests and make semiconductors great again, absolutely.

You have picked a realistic side, which is at least shared by market analysts.

Since these latest few weeks of Intel fire sale rumors, the average analyst’s INTC consensus has dropped.

 

[VCT]

If TSMC does not take over Intel’s operations, or if TSMC takes over but is reluctant to fully commit due to unfavorable deal terms, yield is bad and delivery time is unstable. In such a scenario, who would be held accountable? As a result, major customers withdraw for the next generation, unwilling to place large orders, and the new entity requires an additional $20 billion in capital infusion, how would major customers and shareholders respond?

If the deal is unfavorable to TSMC and TSMC enters a joint venture unwillingly, it will not succeed. US government will face the problem again a few years later.

 

[KevinK]

3. Wait him out, then tear up the deal. Remember China’s agreement to buy goods from the U.S. as part of Trump’s "historic trade deal"? Yeah, China did none of that.

That's the strategy outsiders use to foil Trump. He has "lost" a lot of these kind deals, if anyone is paying attention to long term outcomes.

China bought none of the extra $200 billion of US exports in Trump's trade deal​

https://www.piie.com/blogs/realtime-economics/2022/china-bought-none-extra-200-billion-us-exports-trumps-trade-deal

 

[Markwrob]

That's the strategy outsiders use to foil Trump. He has "lost" a lot of these kind deals, if anyone is paying attention to long term outcomes.

China bought none of the extra $200 billion of US exports in Trump's trade deal​

https://www.piie.com/blogs/realtime-economics/2022/china-bought-none-extra-200-billion-us-exports-trumps-trade-deal

I would think the Taiwanese are also quite adept at making these kinds of deals. So too the Koreans and Japanese for that matter. So outside of actions their boards approve as being supported by good business reasons, they will play the delay game as outlined above.

I wonder if he will think for even a moment about the irony, since he so enjoys doing the same especially in legal situations.

 

[kevin01]

I would think the Taiwanese are also quite adept at making these kinds of deals. So too the Koreans and Japanese for that matter. So outside of actions their boards approve as being supported by good business reasons, they will play the delay game as outlined above.

I wonder if he will think for even a moment about the irony, since he so enjoys doing the same especially in legal situations.

As an $intc shareholder, I oppose TSMC "managing" IFS fabs or any so-called "technology transfer." I believe the US government should level the playing field by: 1) imposing a 30% tariff on Taiwan-manufactured chips (a figure TSMC itself has cited), and 2) providing US-based advanced R&D tax credits to Intel (and other qualifying companies).

 

[nghanayem]

Hard to say anything else when you suggest making semis 30% more expensive just to save your investment

You claimed to be a TSMC shareholder, right? How is fan boying over TSMC any different than an intc shareholder fan boying about Intel?

As an $intc shareholder, I oppose TSMC "managing" IFS fabs or any so-called "technology transfer." I believe the US government should level the playing field by: 1) imposing a 30% tariff on Taiwan-manufactured chips (a figure TSMC itself has cited), and 2) providing US-based advanced R&D tax credits to Intel (and other qualifying companies).

From people who have seen my posting history it is fairly obvious that I have confidence in Intel's plan and ability to become a modern UMC (but with actually cutting edge process technologies). However if at the end of 2026 we don't see large financial improvements from intel's competitive process and reshoring of wafers from TSMC to suggest imminent break even; then the dream is just that and should be let go. Intel needs to compete on their own merits on a level playing field. If it is shown that it can't be done then it shouldn't be done. The most government support Intel should receive beyond their CHIPs grants is investment and R&D tax credits comparable to what fab operators receive when building/operating in TW and streamling permiting/approvals.

 

[Mooredaddy]

You claimed to be a TSMC shareholder, right? How is fan boying over TSMC any different than an intc shareholder fan boying about Intel?

From people who have seen my posting history it is fairly obvious that I have confidence in Intel's plan and ability to become a modern UMC (but with actually cutting edge process technologies). However if at the end of 2026 we don't see large financial improvements from intel's competitive process and reshoring of wafers from TSMC to suggest imminent break even; then the dream is just that and should be let go. Intel needs to compete on their own merits on a level playing field. If it is shown that it can't be done then it shouldn't be done. The most government support Intel should receive beyond their CHIPs grants is investment and R&D tax credits comparable to what fab operators receive when building/operating in TW and streamling permiting/approvals.

Am I demanding TSMC get special treatment via the handcapping of its competitors? That is quite a difference, don't be selectively blind to that. I admire TSMC because they simply outcompete and out hustle their competitors. Being punished for that is simply unfair.

 

[kevin01]

Hard to say anything else when you suggest making semis 30% more expensive just to save your investment

TSMC Arizona Plant Operations Will Reportedly Cost 30% More Than Taiwan Sites | TechPowerUp}

Tariffs are a common tool used by nations to incentivize domestic production, aiming to safeguard employment and bolster long-term economic competitiveness. E.g. Auto industry has been doing this for decades.

 

[Mooredaddy]

TSMC Arizona Plant Operations Will Reportedly Cost 30% More Than Taiwan Sites | TechPowerUp}

Tariffs are a common tool used by nations to incentivize domestic production, aiming to safeguard employment and bolster long-term economic competitiveness. E.g. Auto industry has been doing this for decades.

I.E the auto industry is going to get decimated by tariffs on mexico and canada. Also the semi industry is by nature a global industry, from design, tools, fabrication, testing, packaging. Trying to get it all in one place is insane and just makes everyone poorer. Tariffs are econ 101 bad economic policy

 

[XYang2023]

https://twitter.com/x/status/1892118167062970450

 

[nghanayem]

Am I demanding TSMC get special treatment via the handcapping of its competitors? That is quite a difference, don't be selectively blind to that. I admire TSMC because they simply outcompete and out hustle their competitors. Being punished for that is simply unfair.

I'm aware and I figured this would be your answer. I agree that Intel needs to be competitive on their own merits otherwise you end up with a US shipbuilding industry that only exists because there is a national security reason but is really bad at their jobs compared to various European or Asian yards. It just felt a little bit the pot calling the kettle black. FWIW the tariffs Trump are interested aren't targeted at TSMC and would impact 100% of Intel products as my understanding is that even advanced assembly test products need to go through traditional assembly test in (Costa Rica, Malaysia, Vietnam, China, eventually Poland, or for Intel foundry customers whomever their OSAT is). To say nothing of wafers from Ireland, Israel, and one day Germany. A flat tariff on all semiconductor imports screws everyone who sells final chips in the US except for someone (be it IDM or fabless) making at a US fab (of which there are many) AND a US assembly and testing fab (with the only large facility that will also be available to all being the under construction AMKOR facility setting up near TSMC Arizona). The only way for TSMC to be uniquely screwed is if for some ungodly reason somebody wanted to ship a non TSMC US wafer to get packaged in the US.

 

[Paul2]

It all depends on what can be physically done, I do remember my mentors telling me of the great Asian fab rout of the early nineties:

All developing countries were setting up one semiconductor initiative after another, but by 1993-1994 looking for buyers as politicians found out just how hard, and complex the business is. Famously, one fab in Hongkong was simply abandoned.

By the standards of the time, and most Asian countries, the amount of money lost was astronomical industry-wide.

Only Japanese took ahead, because they already had whole own solutions which they pursued for decades.

Manufacturing chips in the nineties was incomparably simpler than it is today, and it already proved you cannot spin-up a commercially viable competitor to the front-runner from a tech transfer venture.

What will happen if TSMC process, and facility engineers will come to Intel fabs: they will spend years just studying what they got, by the time they finish, the ship will sail again.

 

[chipsntexas]

I would think the Taiwanese are also quite adept at making these kinds of deals. So too the Koreans and Japanese for that matter. So outside of actions their boards approve as being supported by good business reasons, they will play the delay game as outlined above.

I wonder if he will think for even a moment about the irony, since he so enjoys doing the same especially in legal situations.

I think that this is a distinct advantage of several of these Asian countries, and their companies. They are not nearly as beholden to the "quarterly performance" that is the mainstay of corporate America. Intel has no such luxury. This has become an Achilles heal in trying to turn around such a massive behemoth - it's not done in a few quarters with easily seen results. It's a 5+ year process, and only 2-3 years old now...

 

[samwilde]

The Intel board shouldn't have kicked Pat out. He fumbled the financial execution somewhat but he got the rest right. Both the strategy and the product roadmap.
I sold my Intel stock and won't be buying any again, unfortunately Intel seems headed to the fate of many formerly great US companies which get thrown to the corporate vultures.

 

[XYang2023]

The Intel board shouldn't have kicked Pat out. He fumbled the financial execution somewhat but he got the rest right. Both the strategy and the product roadmap.
I sold my Intel stock and won't be buying any again, unfortunately Intel seems headed to the fate of many formerly great US companies which get thrown to the corporate vultures.

I think it is PG who drove the company to the current state.

https://twitter.com/x/status/1895503320930005485

 

[benb]

There is some good news, the second generation discrete graphics cards are getting rave reviews. But it's probably still true that this is too little, too late.

The US has a preference for capital-lite businesses. That's the route AMD took and it was successful. But a second AMD would just be a second AMD. So I think that approach is dead, as a standalone. Could Intel X86 become part of AMD X86? Would that pass through antitrust scrutiny?

As far as the fabs go, I think this is the saddest part of the story. There are basic incompatibilities among the facilities that would prevent Intel fabs running TSMC process successfully. The failure of Samsung 14nm at GF is the illustration of this. The facility is where a lot of the secret sauce is. So the fabs would just be junked and that makes the economics of merging with a larger, healthier player impossible.