Taiwan Semiconductor Manufacturing Company (TSMC) and Broadcom are reportedly considering potential deals with Intel, the storied American chipmaker, as it grapples with manufacturing challenges. TSMC, recognized as the world's largest contract chipmaker, has explored the possibility of acquiring control over some or all of Intel's chip plants. This proposal emerged during recent meetings with TSMC officials, facilitated by former President Donald Trump's team. Sources indicate that TSMC officials were open to the idea, although the Trump administration may oppose foreign operation of Intel's U.S. facilities.
Intel's former CEO, Pat Gelsinger, had set ambitious goals for enhancing the company's manufacturing and artificial intelligence capabilities. However, his strategies fell short, leading to lost or canceled contracts. Consequently, Intel faced significant setbacks, with its shares plummeting by 60% last year due to its capital-intensive manufacturing strategy. In response to these challenges, Intel was compelled to reduce its workforce by approximately 15%.
The U.S. Commerce Department is in the process of finalizing a $7.86 billion subsidy for Intel, reflecting the importance of domestic chip manufacturing. While the White House endorses foreign investments in U.S. facilities, there is reluctance to allow foreign entities to operate Intel's chip plants. This stance underscores the need to maintain critical manufacturing capabilities within national borders.
TSMC's interest in Intel is noteworthy given its significant market presence. With customers like AI chip leader Nvidia and Intel's rival AMD, TSMC's market valuation exceeds Intel's by a factor of eight. This potential deal could enhance TSMC's foothold in the U.S. market while bolstering its already extensive customer base.
Meanwhile, Broadcom is eyeing a different aspect of Intel's business. The company is considering a bid for Intel's chip design and marketing division. However, to manage Intel's manufacturing operations, Broadcom would require a partner. Discussions regarding this potential bid are ongoing with advisers.
Intel has been a key player in the U.S. initiative to onshore chip manufacturing, making it a critical component of national infrastructure. Any potential acquisition or partnership involving Intel would require careful consideration of strategic and national security implications.