TSMC Should Not and Cannot Save Intel

The Storm Media Editorial, February 18, 2025

The future relationship between the Taiwan Semiconductor Manufacturing Company (TSMC) and Intel has recently become a focal point, with various proposals emerging, including TSMC acquiring shares in Intel or splitting up the company. While TSMC may help the United States alleviate its "chip anxiety," it should not and cannot be responsible for saving Intel.

After taking office, President Donald Trump repeatedly expressed dissatisfaction with Taiwan "stealing" American chip manufacturing and even threatened to impose a 100 percent tariff on Taiwan chips. Recent reports indicate that, at the request of the Trump administration, TSMC is considering acquiring shares in Intel’s chip manufacturing plants. Additionally, companies such as Qualcomm and Broadcom may join TSMC in investing or splitting off Intel’s foundry and integrated circuit (IC) design divisions.

With various proposals and speculations circulating, the issues of "easing America's chip anxiety" and "saving Intel" have, to some extent, been conflated or even treated as one and the same.

During the first Trump administration, TSMC invested in the U.S. and received $6.6 billion in subsidies under the CHIPS Act. The driving force behind this move was the intensifying geopolitical competition between the U.S. and China, which made the United States realize its severe lack of domestic chip manufacturing capabilities. In particular, more than 90 percent of advanced semiconductor manufacturing depended on TSMC. As TSMC continued expanding its investments in the United States, building new plants, and advancing its semiconductor processes, the "chip anxiety" caused by declining American manufacturing capabilities, though not completely resolved, was at least somewhat alleviated.

However, Intel’s shrinking market share has led to financial deterioration, with the company suffering a $13 billion loss last year and undergoing large-scale layoffs. Its chief executive was also replaced, casting serious doubts on its future. Various rescue plans have since emerged, including the notion of TSMC stepping in to save Intel.

From a business competition perspective, if TSMC were to "operate on behalf of" or invest in Intel while transferring decades of accumulated technology to its rival, it would be entirely unrealistic. Intel was once the global leader in semiconductors, and TSMC had to make immense efforts to surpass it. Now, if TSMC were to serve as Intel’s technical support, it would not simply be a case of "taking advantage of TSMC"—it would essentially amount to "outright plundering" of TSMC’s technology and intellectual property.

Therefore, if TSMC is to assist Intel, it must do so in a way that allows TSMC to control Intel, ensuring that it does not cultivate a future competitor. This would mean that TSMC must acquire Intel—at least its foundry division—not merely by holding a minor 10 to 20 percent stake but by obtaining full control.

This raises two critical questions. First, how will the acquisition terms and price be determined? If the price gap is too significant, will the Trump administration be willing to inject funds to bridge the difference? Second, will the U.S. government allow a foreign company to take control of Intel? Intel is a symbol of America's semiconductor industry, and its acquisition by a foreign enterprise would raise concerns about national pride, sentiment, and national security. Reports indicate that the Trump administration remains skeptical about a non-U.S. company taking over Intel, which could become a major obstacle.

As a result, TSMC can help ease America's chip anxiety by continuing to invest in the United States and advancing its semiconductor processes without transferring core technologies. Another possible approach is acquiring or controlling Intel’s foundry division, but this depends on acquisition terms, pricing negotiations, and whether the U.S. government is willing to "let go."

For those hoping that TSMC will act as a "white knight" to rescue Intel, such expectations are highly unlikely to materialize. Not only is it difficult to reach agreements on the conditions, but Intel’s current struggles are also not easily reversible. Although TSMC is not powerless, it still needs to carefully navigate its approach to avoid being dragged into Intel’s predicament. Taiwan’s government has limited ability to alleviate pressure on TSMC, meaning that, in the end, TSMC must handle this situation independently and avoid being transformed into an "American Semiconductor Manufacturing Company."

From: https://www.storm.mg/article/5325325?mode=whole
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