There is no point in TSMC taking control of Intel’s factories, industry experts say

All weekend, major foreign news agencies vied with each other to reveal details of the negotiations between the US government, the management of Intel and TSMC regarding a possible plan to save the former by the latter. Industry experts agree that it makes no economic or technical sense for TSMC to take over Intel’s factories.

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Of course, as analysts interviewed by EE Times explain, there is a political factor that is left out of this equation, which could ultimately play a decisive role. Taiwan’s TSMC is too dependent on US patronage, and the country’s current president, Donald Trump, made it clear during his election campaign last year that he was not going to stand on ceremony with Taiwan’s interests.

According to the management of International Business Strategies, the interests of the American authorities and TSMC in the framework of the discussed initiative to “rescue” Intel do not fully coincide. The United States needs extensive production capacities on its territory, capable of producing chips using 2-nm technology. TSMC is not particularly interested in gaining control over Intel’s American enterprises. IBS representatives can judge this with confidence, since they communicate with the management of both companies.

As TechInsights analysts emphasize, TSMC has no rational reason to help Intel, except for pressure from Donald Trump. In fact, Intel itself is doing a good job of producing chips and has mastered 18A technology, but its main problem is the lack of third-party orders to fill production lines in an optimal way. If TSMC takes over Intel’s enterprises, the latter will become an anchor for the former, slowing down progress.

TSMC has already proven more than once that it is forced to submit to the political situation. At the request of the American side, it stopped producing advanced chips for the needs of China’s Huawei Technologies, agreed to build three plants in Arizona, and can only help revive Intel’s business for reasons of demonstrating political loyalty to the US authorities.

According to experts from the Albright Stonebridge Group, one of the few useful forms of assistance from TSMC for Intel could be assistance in finding clients for contract services. And for this, it is not necessary to take control of Intel’s American enterprises. If the US political leadership devoted more time to studying the problem, then truly effective solutions could appear.

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FCC Partners analysts claim that the US authorities are interested in increasing TSMC’s investment in the American semiconductor industry. Officials may persuade the Taiwanese chipmaker to build five factories in the US instead of three, but the project budget would have to be increased from the current $65 billion to $200 billion. This would also justify TSMC organizing chip packaging in the US using the advanced CoWoS technology. It is very important for the production of modern computing accelerators, and while the US lacks the appropriate infrastructure, the chips will have to be sent to Taiwan at an intermediate stage.

Perhaps TSMC will find the courage to bargain in negotiations with the new US authorities. The company would certainly not refuse tax breaks for its Arizona enterprises, at the same time it would be useful to remove the restrictions on the development of production in China that are imposed on recipients of subsidies under the Chip Act in the US. However, China currently provides no more than 10% of TSMC’s revenue, while dependence on the US is only increasing. Moreover, three TSMC enterprises are to be built here by the end of the decade.

SemiAnalysis experts argue that TSMC’s three Arizona plants will not be enough to ensure U.S. technological sovereignty. The cluster can only produce a fifth of the 5-nm and 3-nm chips that TSMC produces in Taiwan. In addition, the company’s American plants will be a couple of generations behind Taiwan’s in lithography, which means that U.S. dependence on Taiwan will only increase. If Intel were to get back on its feet, the American company would play a decisive role in ensuring national technological sovereignty.

When Intel negotiated with the previous US administration to receive $7.68 billion in subsidies under the Chip Act, one of the conditions was that the company retain the majority of capital in any joint ventures that would change the ownership structure of its manufacturing facilities. The union of TSMC and Intel in terms of managing chip production would sooner or later lead to the degeneration of the American company’s own competencies in the field of technology development, according to experts from TechInsights. At the very least, TSMC would not be interested in spending twice as much money on the same thing. In addition, Intel is one of TSMC’s main competitors, and the Taiwanese giant is simply not interested in helping its rival. There is no point in spending money to save a competitor when you can simply wait for it to leave the market and achieve a near-monopoly position in business.