Intel Negotiates Possible Split with TSMC Amid Semiconductor Struggles
Intel is negotiating with TSMC and the Trump administration to potentially split its semiconductor manufacturing business as it struggles to remain competitive.
Intel, a major player in the semiconductor industry, is discussing a plan with the Trump administration to transfer the operation of its chip-making plants to Taiwan Semiconductor Manufacturing Company (TSMC).
Frank Yeary, Intel's interim executive chairman, has held talks with administration officials and TSMC leaders. The proposed deal would separate Intel's struggling manufacturing business from its design and product division.
TSMC is a dominant producer, generating about 90 percent of the world's advanced semiconductors. Under the proposed agreement, TSMC would take majority control of Intel's manufacturing business and possibly seek investment from private equity firms and other tech companies.
The Trump administration has been supportive of this deal. Nominee for commerce secretary, Howard Lutnick, views the partnership as a significant concern in his new role.
Intel has faced difficulties in competing against TSMC, particularly because most of TSMC's production occurs in Taiwan, posing a strategic risk for the U.S. due to tensions with mainland China.
Details regarding the extent of the deal remain uncertain, including whether it would involve Intel's domestic plants in states like Oregon, Arizona, and New Mexico or include sites in Ireland and Israel.
Despite receiving government subsidies through the CHIPS Act, Intel has continued to struggle after failing to keep up with smartphone and AI chip developments. Meanwhile, TSMC declined to comment, and discussions about a potential partnership emerged late last year when Intel's board approached TSMC.
Intel's need to pivot has drawn interest from companies like Qualcomm, which may want to acquire Intel's product business. There are discussions on whether an American company like Intel should be managed by a foreign entity.
Trump's stance on the semiconductor industry differs from that of President Biden's administration. Trump believes in imposing tariffs rather than subsidies to revive American chip manufacturing.
In response to U.S. concerns, Taiwanese leaders are working closely with TSMC to reassure both American and Taiwanese interests regarding semiconductor manufacturing.
As the situation unfolds, TSMC has the potential to meet U.S. demands by expanding its manufacturing capabilities in the U.S. The shift signals significant changes in Intel's operational model as the company faces declining fortunes in the semiconductor space.
Intel's manufacturing unit reported an operating loss of $13.4 billion in 2024. With stock prices plummeting, the company is under pressure to adapt its strategy, leading some analysts to comment that breaking up Intel could lead to its disappearance as we know it.
Chris Buckley contributed reporting from Taipei, Taiwan.
