Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturing) corporation, has received a proposal for cooperation with Intel, a symbol of the U.S. semiconductor industry, from the administration of Donald Trump. However, the market sees this as a choice that could bring more harm than good for TSMC. Given that about 70% of TSMC's revenue comes from U.S. clients, it is expected to be difficult to completely reject the demands from the U.S. Consequently, TSMC's stock has fallen to its lowest level since the end of December last year.
According to Taiwan's United Daily News on the 17th, the Trump administration reportedly wants TSMC to acquire a 20% equity stake in its Intel Foundry Services (IFS) unit. Accordingly, TSMC is reviewing options such as investment. However, specific details regarding the method of equity acquisition and the amount have not yet been determined. Once a dominant player in the global semiconductor market, Intel is struggling to compete against AI chip manufacturers like Nvidia, having failed to respond to the shift towards artificial intelligence (AI).
Regarding the possibility of collaboration between TSMC and Intel, investment bank Goldman Sachs noted that the benefits for TSMC are minimal, making cooperation unlikely. TSMC and Intel have significant differences in their business models, semiconductor process ecosystems, and equipment, which would make it difficult to create synergies, even if a joint venture were established. Furthermore, TSMC has maintained a conservative stance on technology sharing and avoids joint investments to uphold neutrality among clients. Cooperation with Intel does not align with TSMC's principle of independent management. Additionally, if TSMC and Intel were to pursue cooperation, there is a considerable likelihood of facing stringent scrutiny over antitrust law violations.
Kuo Ming-Chi, a researcher at Taiwan's TF International Securities, analyzed that TSMC needs to find a compromise with the U.S. government to maintain core semiconductor technology in Taiwan. He stated, "TSMC's ultimate goal is to keep semiconductor manufacturing know-how and research and development (R&D) activities in Taiwan," adding that if the U.S. demands technology transfer, it would lead to significant losses for TSMC and its shareholders. He further mentioned, "For collaboration with Intel, TSMC would need to integrate Intel's patents, equipment, technology, and supply chains, and secure customer trust in the semiconductors produced at Intel's factories, making the process complex."
TSMC's acquisition of equity in Intel has been argued to be akin to taking on 'toxic assets,' with concerns over potential technology leaks indicating a lack of real benefits. Liu Peijian, director of the Taiwan Economic Research Institute, expressed that "Weizhe Zhang, TSMC chairman and CEO, previously stated that he has no intention of taking on Intel's burdens while considering the acquisition of Intel's fabs," and he raised concerns that cooperation with Intel, a competitor, could expose TSMC to the risk of technology leaks. Earlier, CEO Weizhe Zhang mentioned during a performance briefing in October of last year that he is not considering acquiring Intel's semiconductor factories at all.
Industry evaluations suggest that TSMC expanding its production facilities in the U.S. instead of collaborating with Intel is a more realistic option. TSMC did not announce specific responses to the tariff policy of the Trump administration during its board meeting held in the U.S. for the first time on the 12th (local time), but it did approve a capital budget of $17.14144 billion (approximately 25 trillion won). This amount is intended for expanding and upgrading advanced semiconductor process production capacity, indicating a possibility of increased investment in the U.S. Kuo Ming-Chi stated, "If TSMC were to add advanced packaging facilities to the Arizona plant, it could provide immediate results to the U.S. government and its customers."
Stacy Rasgon, a researcher at U.S. investment bank Bernstein, analyzed that "From the perspective of the Trump administration, encouraging TSMC to expand its investments in the U.S. is the simplest way to achieve 'Made in America.'" He noted that, unless conditions are extremely favorable, the likelihood of TSMC sharing its advanced process technologies and intellectual property (IP) with Intel is low, thus making it less risky for TSMC to increase production investments in the U.S. while securing additional support from the U.S. government than attempting to save Intel.