With the help of Trump, Intel could deliver control of chip plants to TSMC

Intel, a fallen Silicon Valley icon trying to restore its reputation as America’s most important semiconductor company, works with Trump’s management into a plan to convert the operation of chip production units into a giant Taiwan.

In recent months, Frank Year, Intel’s temporary executive chairman, he spoke with administration officials and leaders of Taiwan’s Semiconductor production company about an agreement that will separate Intel’s problematic business from semiconductor design and product businesses, According to four people with knowledge of the plan, who spoke about the condition of anonymity.

TSMC, which produces about 90 % of the world’s most advanced semiconductor, will take control of Intel’s production business and receive a majority share in the business alongside a consortium , the four people mentioned ,.

Trump’s administration encouraged TSMC to make the deal. Howard Lutnick, President Trump’s candidate for Commerce Secretary, participated in the talks and considers them one of the most consequent challenges of his new job, two of the people who are familiar with discussions.

It is not clear how much of the Intel production business will take over TSMC or how much money the Taiwanese will invest. The agreement could be confined to Intel’s domestic plants in states such as Oregon, Arizona and New Mexico, or also include facilities in countries such as Ireland and Israel, people said.

Intel’s business prospects dug after it failed to develop brands of smartphone and artificial intelligence. Despite the Government’s best efforts to revive the company, it promises billions of dollars of subsidies through the Biden administration’s brands law, Intel continued to fight.

Intel and TSMC refused to comment. Mr Lutnick did not respond to a request for comments.

At the end of last year, the Intel Board of Directors approached the TSMC to measure its interest in some kind of cooperation, two of the people who were familiar with the conversations said. In January, TSMC CEO, CC Wei, met with Mr. Lutnick and Mr Yeary separately to discuss how a connection could work.

Mr Yeary was regularly talking to Mr Lutnick about the idea since then, three of these people said. The Intel president’s interest in splitting the company also opened the door to inspectors interested in acquiring the Intel products, including Qualcomm. A Qualcomm spokesman refused to comment.

Some details of the discussions were previously mentioned by Digitimes, a Taiwan news agency and Bloomberg.

The question now is whether Trump’s administration believes that a problematic national champion like Intel is better in the hands of a foreign company or whether management has to look for another solution.

“Even with possible government support from the law on brands and officials willing to see the business recover and lead the rebirth of advanced construction to the US. The road will be tough,” said Paul Triolo, a partner of Albright Stonebridge Group watched by the industry.

Hanging on the negotiations is questions about Mr Trump’s approach to the Chips industry and Taiwan, which is abruptly different from former President Joseph R. Biden Jr. Mr Trump has criticized Biden’s investment in domestic chip construction, threatening to impose invoices on foreign brands, accused Taiwan of stealing the semiconductor industry away from the United States and challenged US military support for the island. It seeks to defend itself against Beijing’s violation.

In the observations of Republican legislators in late January, Mr Trump said that a major invoice, not subsidies, was the only thing it took to force the chips back to the United States.

“We want to come back and we do not want to give them billions of dollars like this ridiculous program that Biden has,” the president said.

At the hearing of the Senate confirmation on January 29, Mr Lutnick seemed to walk a careful line on the chips program. He described it as “necessary and important” and “advance” for the production of construction in the United States. However, Mr Lutnick refused to commit herself to honor the contracts already signed by companies with the government.

To determine Mr Trump, Taiwan’s officials and businessmen cultivate links with people in his orbit, float new gas agreements and trying to explain how Taiwanese’s semiconductor production benefits the United States.

Taiwan officials are also watching talks on Intel’s future. For Taiwan, TSMC’s dominance for advanced chip production has become what some commentators call a “silicon shield” that prevents China’s military action and encourages support from the United States.

Taiwan President Lai Ching-Te said on Friday that his government will work with the island’s semiconductor companies to develop a strategy addressed to Mr Trump’s complaints, while protecting Taiwan’s role in the chip sector. .

“The Taiwan government will be in mutual contact and discussions with the semiconductor to shape the right strategy and then there will be further discussion on proposals with the United States,” Mr Lai said at a press conference.

TSMC could face Mr Trump’s demands, simply creating more production capacity in the United States, said Stacy Rasgon, a semiconductor analyst at Bernstein Research. The TSMC, which received up to $ 6.6 billion in brands law, manufactures three factories in Arizona and is able to expand there.

The idea of ​​Intel’s dissolution talks about how much the company’s possessions have changed. Founded in 1968, it became the most valuable semiconductor company in the world, designing and manufacturing chips for personal computers and data centers. But the company has struggled in recent years to innovate and grant ground to opponents such as Nvidia, the dominant manufacturer of AI Chips.

Pat Gelsinger, named CEO of Intel in 2021, promised to turn the company around the rejuvenation of its business, but the effort retreated. In November, the Intel Board of Directors forced Mr Gelsinger to resign.

Intel’s production company, which calls the Intel Foundry, reported a $ 13.4 billion operational loss in 2024, as customers have fallen by 60 %. Last year, the company said it was planning to make the business an independent subsidiary.

At the price of Intel’s shares decreased by almost 50 % in the past year, Intel’s split could make it vulnerable to a acquisition, said Patrick Moorhead, founder of Moor Insights and Strategy, a technology company.

“Intel, as we know, will cease to exist,” he said. “It would be the absolute end of an era.”

Chris buckley References are contributed by Taipei, Taiwan.