The Taiwanese chip manufacturer TSMC would consider taking a majority share in the ailing Intel. Bloomberg reports that Based on anonymous sources. The idea comes from the tube of the Trump government, which threatens with import tariffs on chips.
Taiwan supplies the advanced computing power for Apple, Nvidia and Tesla. Those tech companies design the processors, TSMC takes care of mass production – such as a newspaper uses an external printing company.
However, that dependence on one small island, within reach of China, is a strategic risk. The US therefore tries to bring the production of semiconductors back to American soil by providing billion -dollar subsidies. TSMC already built a few chip factories in Arizona, but they only deliver a fraction of the required chips.
Trump believes that raising rates on imported chips – up to 100 percent – works better than giving a subsidy. However, it takes years to build new chip factories and such a high rate would immediately lead to major price increases for American consumers and companies. There seems to be a tactic to get TSMC at the negotiating table.
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The Trump negotiators ask the Taiwanese to help keep Intel going. Intel was once the largest chip manufacturer in the world, but is technologically behind TSMC and is in the financial problems. CEO Pat Slager had to get on in December and the American company is about to cut itself in two parts: one division that designs the chips and one division that produces the chips, also for other customers.
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The Biden government had already asked TSMC to licensed Taiwanese production technology to Intel, but TSMC refused. Now that Trump threatens with rates, TSMC would like to consider participating in Intel, although the negotiations are still at an early stage according to Bloomberg.
TSMC would be part of a consortium with several American chip designers, including support from the US government.
Such joint ventures are customary in the chip industry: for example, in Dresden in Germany, TSMC builds its own European factory ‘ESMC’ in which NXP, Bosch and Infineon also have an interest.
Also in Singapore and in Japan, TSMC has that joint ventures, factories that run on Taiwanese expertise and are full of chip machines from Dutch tech companies such as ASML and ASM International.
Intel tinkers with better production processes in new factories. But the required capital dries up and customers for the new factories are hardly there – who first want to see evidence that Intel can make modern chips. For the time being, Intel himself also has his most advanced designs printed at TSMC.
A complete takeover of Intel’s factories by a foreign company is unthinkable. The US recently blocked the acquisition of steel company US Steel through the Japanese Nippon Steel. The chip industry is at least such a crucial sector for the US economy, in which the US would like to become less dependent on abroad.