By Arsheya Bajwa
(Reuters) -President Donald Trump’s administration would probably not support the American chip factories operated by a foreign entity, a White House official told Reuters.
The comments came after Bloomberg reported that Taiwan’s TSMC, the world’s largest chip maker, is considering taking a controlling interest in Intel’s factories at the request of Intel.
The White House officer said that the Trump administration supports foreign companies that invest and build in the US, but is “unlikely” to support a foreign company that operates the Intel factories.
Earlier, Bloomberg had reported that the Trump team raised the idea of a deal between the two companies in recent meetings with civil servants of TSMC, and they were receptive to a person who was familiar with the case.
The conversations are in very early stages and the exact structure of a potential partnership has not been established. But the expected result would have TSMC fully work the American semiconductor factories of Intel, Bloomberg reported.
Such a deal could throw a financial lifeline at Intel, who has had difficulty restoring its lost chipping glory because it could not take advantage of an AI tree and billions of dollars to become a contract chip manufacturer -a transformation that still has to materialize.
Intel shares closed 2.2% on Friday, while the US listed stocks of TSMC locks around 1%.
“Combining the expertise and engineers of TSMC with the infrastructure of Intel could help start President Trump’s dream to make the US the center of the chipuniversum,” said Brian Jacobsen, chief economist at Annex Wealth Management.
But such a deal would need deep concessions on both sides.
If TSMC accepts a scheme to run the Intel factories, it should make important changes to the activities of the American chip maker because every chip manufacturer has different methods and techniques for operational factories.
To serve the Fabs of Intel, TSMC would probably also have to reveal some of its secret techniques and processes to intelate employees.
For its part, Intel should admit that the production activities would be a completely different entity, probably with a completely different working culture.
TSMC also fully raises the factories of Intel, known as Fabs, also questions about the most important strategy of Intel to produce the chips it has designed. Most chip makers are “fabless” – outsourcing for TSMC, which offers considerable cost savings.
“If Intel goes down this path, focus on being a semiconductor design company. So you look more like a Broadcom or a Marvell or an AMD,” said Wedbush Securities analyst Matthew Bryson.
