Could President Trump force TSMC to take a stake in Intel Foundry Services?
With rumors flying about TSMC possibly taking a 20% stake in Intel's Foundry Services unit, it is important to note that many analysts believe the Trump administration is behind this potential transaction. Reports say that the Trump administration wants the U.S. to be one of the leaders in the production of sub 2nm chips even though Taiwan-based TSMC is responsible for 90% of the most advanced chips manufactured today.
TSMC might have to do Trump's bidding if it wants to have protection from an attack by China, a country that wants to be just as self-sufficient when it comes to chips as the U.S. But the U.S. president does ask that a price be paid for protection. Some analysts believe that Trump will demand that TSMC work out a transaction that results in its acquisition of a stake in Intel Foundry Services which is expected to match TSMC and Samsung Foundry with its 18A node (1.8nm) which will start mass production later this year. The other two foundries will begin mass production at 2nm this year.
"Trump’s deal-making extends beyond intimidation. He’s shown a willingness to demand staggering sums in exchange for ‘protection’ or to propose radical relocation projects—anything that realizes his vision of U.S. global dominance. Semiconductors and AI are the heart of the U.S.-China rivalry, so expect him to play every card."-C.Y. Huang, president, FCC Partners
The president would be happy to see TSMC involved with Intel because the former could help Intel get business for its foundry from top chip designers like Nvidia, Qualcomm, Broadcom, and other TSMC clients. Despite all of the reasons why TSMC might be seriously looking to buy part of Intel's foundry business, many analysts say that TSMC has no interest in Intel's fabs. Most of Intel's advanced chips are produced in the U.S. which is why TSMC taking a stake in Intel Foundry Services is so important to the administration's goals.
TSMC's Arizona fabs are not really the answer for the U.S. right now since volume at the 3nm and 5nm nodes is less than 20% of the volume produced in Taiwan at those nodes. And with the fabs in Arizona about to fall two process nodes behind the leading edge, the Arizona facilities will need to pick up more volume in order to give the U.S. the feeling of being self-sufficient in advanced chip production.
Just as Intel needs TSMC to attract big-name clients for its Foundry Services, the Trump administration needs Intel to help it take over leadership in supplying cutting-edge chips for military use. At this point, most analysts don't expect to see TSMC's interest in Intel getting past the rumor stage.
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