Reports that the world’s largest contract chipmaker — Taiwan’s TSMC — was considering taking a controlling share in storied American chip giant Intel has stoked concern across the island, and also in the White House.
The Wall Street Journal reported on Saturday that two of Intel’s biggest rivals, TSMC and American chip designed Broadcom, were each eyeing potential deals that would break the US chipmaking icon in two.
TSMC, the world’s biggest contract chipmaker, had studied controlling some or all of Intel’s chip plants, potentially as part of an investor consortium or other structure, the report said citing people familiar with the matter.
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Broadcom, meanwhile, had been closely examining Intel’s chip design and marketing business, the Journal reported. The company had discussed a potential bid with its advisers but would likely only proceed if it found a partner for Intel’s manufacturing business, it added.
Broadcom and TSMC are not working together and all of the talks so far are preliminary and largely informal, the WSJ reported.
Separately, media reports also said that TSMC was considering taking a controlling stake in Intel’s factories.
The speculation were a continuation of a note from US asset manager Baird that said last week that the Donald Trump government wanted TSMC to form a joint venture with Intel and co-own and develop multiple chip foundries.
The reports stoked anxiety across Taiwan, sparking concern that the island would lose its “silicon shield” that deters a Chinese attack and ensures American support.
Frenzied media reports, from China-owned networks, also claimed such a tie-up was not in TSMC’s favour and that the chipmaker was a victim of bullying by the Trump Administration.
Those concerns were also reported by the island’s state-owned news publisher Focus Taiwan, which cited an expert as saying that a joint venture with Intel would put chipmaker “in a more disadvantageous position” than facing potential tariffs imposed by US president Trump on American chip imports.
“If a joint venture with Intel is formed, it will inevitably focus on advanced semiconductor technology and once technology leaks occur, that could jeopardize TSMC’s leading edge in advanced technology,” the report quoted Liu Pei-chen, a researcher at the Taiwan Industry Economics Database of the Taiwan Institute of Economic Research (TIER), as saying.
TSMC boasts a market valuation about eight times larger than that of Intel. The Taiwanese company’s customers include AI chip leader Nvidia and AMD, which is Intel’s fierce rival in PC and server markets.
Trump involvement in question
Meanwhile, comments from the White House on Friday put to question Trump’s involvement in the rumoured talks.
A White House official told Reuters that the Trump administration supports foreign companies investing and building in the US but is “unlikely” to support a foreign firm operating Intel’s American factories.
The official did not immediately comment on whether Trump’s team met with the companies and raised the idea of such a deal, Reuters said. It added that the official also did not immediately respond to follow-up questions about whether TSMC could be involved with Intel’s factories through a joint entity headquartered in the United States.
Trump has in the past months been severely critical of Taiwan, saying the island needed to pay the US for its defence while also accusing it of stealing American chip businesses.
He re-iterated the latter claims last week, leading Taiwan to say that there was no need for one country to control the semiconductor industry.
What an Intel tie-up could mean for TSMC
Should TSMC accept an arrangement to run Intel’s factories, it would have to make significant changes to the US chipmaker’s operations because each chip manufacturer has distinct methods and techniques for operating factories.
To operate Intel’s fabs, TSMC would also likely need to reveal some of its proprietary techniques and processes to Intel employees.
Analysts say TSMC might look for some tariff exemptions in order to make a deal happen with Intel, which has struggled to restore its lost chipmaking glory.
Taipei-listed shares of TSMC closed with gains of 2.4% on Monday, outperforming a larger 1.5% gain on the Taiex index.
- Vishakha Saxena, with Reuters
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