tsmc eyes intel acquisition amid chips act debate
taipei, Friday, 21 February 2025.
Taiwan Semiconductor Manufacturing Co. is considering acquiring parts of Intel. The move could dramatically reshape the semiconductor industry. Intel’s stock surged 10% this week amid acquisition rumors. The Trump administration reportedly encouraged TSMC to pursue the deal. Howard Lutnick, President Trump’s nominee for commerce secretary, is involved. A White House official stated the president is unlikely to support a deal that involves a foreign entity operating Intel’s factories. Intel’s potential sale follows a challenging year, with the company’s stock losing over 60% of its value in 2024.
chips act implications
The potential acquisition is intertwined with the U.S. CHIPS and Science Act, which earmarked $39 billion in direct incentives for semiconductor manufacturing [1]. Intel has already received significant backing, including $7.865 billion in grants authorized by the Biden administration for factory expansions across four states [1]. TSMC itself is slated to receive up to $6.6 billion in direct funding and $5 billion in loans to establish three fabrication facilities in Arizona [1]. This government support aims to bolster domestic chip production and reduce reliance on foreign manufacturers [GPT].
market analyst perspectives
Market analysts are divided on the merits of a TSMC-Intel deal. Some suggest it could unlock asset value for Intel, which faced substantial losses of $16.6 billion in Q3 2024 and $126 million in Q4 2024 [1]. Others caution that integrating Intel’s existing fabs with TSMC’s advanced production systems would be challenging [7]. A Bloomberg analyst noted potential risks to TSMC’s profitability and market influence if it invests in Intel’s manufacturing arm [7]. The analyst also highlighted the risk of intellectual property leakage, potentially undermining TSMC’s edge in advanced processes [7].
manufacturing capacity and geopolitical factors
TSMC’s acquisition of Intel assets could significantly impact global manufacturing capacity. TSMC already produces over 90% of the world’s most advanced semiconductors [1]. Integrating Intel’s facilities could further solidify its dominance, but also raises concerns about potential over-reliance on a single entity [GPT]. Geopolitical considerations also weigh heavily, with the Trump administration’s stance and potential trade tensions adding complexity [7]. One analyst described TSMC’s investment in the U.S. as ‘forced appeasement,’ highlighting the geopolitical pressures [7].
potential impact on tsmc stock
The implications for TSMC’s stock are uncertain. While acquiring Intel assets could expand TSMC’s manufacturing capabilities, it also introduces integration risks and potential conflicts with existing customers [7]. The deal’s impact on TSMC’s earnings per share remains unclear, with concerns that the investment may not yield strategic benefits due to Intel’s lagging competitiveness in advanced process technologies [7]. Moreover, potential tariffs and increased costs associated with U.S.-based manufacturing could further pressure TSMC’s valuation [7].