intel takeover? tsmc faces us pressure amid intel woes

2025-02-28 tsmc

Taipei, Friday, 28 February 2025.
The U.S. government is reportedly pressuring TSMC to intervene in Intel’s struggles. This intervention could take the form of an acquisition or technical assistance. Four former Intel directors are pushing back. They claim this move could damage the U.S. semiconductor industry. Intel’s tech lags behind TSMC by at least one generation. The company’s assets still hold an estimated value of $100 billion. Critics suggest the U.S. should help Intel reform internally.

Strategic concerns for the us

Four former Intel directors, including David B. Yoffie, argue that a forced takeover would harm U.S. interests [1]. They believe the most advanced technology would remain in Taiwan [1]. The directors suggest TSMC might reduce Intel’s R&D and manufacturing teams [1]. They emphasize that top U.S. semiconductor companies should have R&D centers in the U.S. or other Western countries [1]. The directors also warn against entrusting chip manufacturing to a region with geopolitical risks, such as Taiwan [1].

Risks of relying on tsmc

Depending solely on TSMC for semiconductor manufacturing poses dangers [1]. It could hurt U.S. chip design firms like Nvidia, AMD, and Qualcomm [1]. These firms may seek other suppliers if TSMC acquires Intel’s fabs [1]. This could weaken the competitiveness of the U.S. chip industry [1]. The former Intel directors propose splitting Intel into design and manufacturing divisions [1]. They suggest allowing only U.S. or Western private investment groups to acquire the fabs [1].

Potential financial support

To support a U.S.-based foundry, the government should provide $10 billion in funding [1]. This support could come with non-voting equity to share in the success [1]. Major U.S. design companies, such as Nvidia and Apple, should commit to providing orders [1]. This would ensure a stable business source for the new foundry [1]. This strategy aims to create a second foundry option in the U.S., reducing reliance on TSMC [1]. It could also help the U.S. regain chip manufacturing leadership [1].

Tsmc’s perspective

From a business standpoint, TSMC has little reason to acquire Intel’s fabs [1]. Intel’s process technology lags behind TSMC’s by at least one generation [1]. The factory equipment architecture differs, leading to high conversion costs [1]. Intel’s clients, like Nvidia and Qualcomm, compete with TSMC [1]. If TSMC buys Intel’s fabs, these clients might switch to other foundries like Samsung [1]. TSMC’s production is mainly in Taiwan, and expanding to the U.S. would bring challenges [1].

Market reaction and recent performance

The broader technology sector experienced a sell-off, impacting TSMC’s stock [4]. This downturn was triggered by Nvidia’s earnings report and new tariff announcements [4]. The iShares Philadelphia Exchange Semiconductor ETF (SOXX) fell nearly 6%, reflecting industry-wide pressure [4]. TSMC experienced a significant drop of 13.53% [4]. This decline reflects its exposure to the AI and semiconductor manufacturing ecosystem [4]. Concerns over supply chain disruptions and geopolitical tensions also contributed [4].

Furiosaai investment

TSMC is planning to invest in FuriosaAI, a South Korean AI chip design startup [2]. TSMC’s investment arm, TSMC Global, is discussing the investment’s scale and conditions [2]. FuriosaAI is known for its AI inference chips [2]. Its RNGD chip, made using TSMC’s 5nm process, rivals Nvidia’s L40S in performance but consumes less power [2]. Meta is reportedly planning to acquire FuriosaAI [2]. This potential acquisition, along with TSMC’s investment, highlights the dynamic nature of the AI chip market [2].

Geopolitical considerations

Concerns are rising that Taiwan is becoming subservient to the U.S., potentially turning TSMC into an ‘American TSMC’ [8]. This perspective suggests external pressures on TSMC could shift its strategic direction [8]. The concept of a ‘non-red supply chain,’ excluding mainland Chinese companies, is gaining traction in Taiwan [9]. This approach aims to ensure technological advantages for Taiwan, the U.S., and other ‘democratic partners’ [9]. However, critics argue this strategy could isolate Taiwan and harm its economic prospects [9].

Bronnen

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