The world's largest foundry company, Taiwan Semiconductor Manufacturing Company (TSMC), is under pressure from U.S. President Donald Trump's America First policy. In response to the tariff threats from Trump, TSMC decided to establish additional semiconductor manufacturing plants, advanced packaging plants, and research and development centers in the United States, raising concerns that its big tech clients might shift to Intel, a symbol of the American semiconductor industry.
According to Reuters on 3rd (local time), major U.S. semiconductor design corporations like NVIDIA, Broadcom, and AMD are reported to be conducting tests on Intel's 18A (1.8 nanometers; 1 nanometer is one billionth of a meter) process. The 18A is the cutting-edge process Intel has been pursuing since it announced its re-entry into the foundry business in 2021.
The issue is that NVIDIA, Broadcom, and AMD are among TSMC's top five clients. In particular, NVIDIA is the second-largest client after Apple, contributing 12% of TSMC's total revenue last year. As these corporations test Intel's 18A process faster than expected, TSMC cannot rule out the possibility of having to concede hundreds of millions of dollars in manufacturing contracts to Intel.
Industry experts suggest that NVIDIA and others, once considered 'loyal customers' of TSMC, are reviewing transactions with Intel not based on technical judgments, but rather due to significant political factors. Since late last year, Intel has confidently announced that it would surpass Samsung Electronics, the second-largest in the foundry industry, and compete with TSMC by mass-producing semiconductors through the 18A process. However, issues such as low yields have continually delayed the mass production schedule for the 18A process. Despite this situation, major U.S. semiconductor design corporations are showing movements in support of Intel, aligning with the America First principle of the Trump administration.
The variable is the completeness of Intel's 18A process. In a conference call in January, Intel announced plans to start mass production of 18A process-based chips in the second half of this year. However, Reuters reported that the operational timeline for the 18A process has been postponed to mid-next year. In response, Intel stated, 'We cannot comment on specific customers, but there is high interest and participation in the 18A process,' and insisted, 'We expect to start mass production this fall, with customer designs to be submitted to Intel's foundry factory this year.'
Amid these developments, pressure from the Trump administration on TSMC is expected to continue. Following ongoing threats of tariff imposition on Taiwanese semiconductors, TSMC ultimately declared capitulation. The previous day, TSMC Chairman Wei Zhejia met with President Trump at the White House and announced plans to invest an additional $100 billion (approximately 146 trillion won) in the U.S., bringing the total to $165 billion (approximately 240 trillion won). Initially, TSMC planned to build three semiconductor production plants in Arizona, but in addition, it plans to establish two manufacturing plants, two advanced packaging plants, and a research and development center. This marks the largest investment ever made by a foreign company in U.S. history, but industry experts believe the Trump administration is likely to continue pressuring TSMC by prioritizing Intel in order to revitalize the U.S. semiconductor industry.