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Credit: Intel
Intel’s shares have risen more than 20% recently, as investors are providing a possible company divided into hearing, suggesting that the Trump administration can push Intel and TSMC to create a joint venture to absorb Intel production capacity. Four former Intel directors wrote a column in Fortune magazine, explaining that it was a terrible idea and suggested that it rotates outside of Intel the production of an individual company, which would instead be owned by US investors.
There has been speculation that the new US government may put pressure on Intel and TSMC to form a joint venture to take over Intel production facilities for semiconductors, which are estimated at approximately $ 108 billion. These facilities cover many American places, including Arizona, New Mexico and Oregon, with an additional site in Ohio. In addition, Intel has FABS in Israel and Ireland. The Trump administration denied its participation and said it would not welcome a Taiwanese company to take over Intel Fabs. The TSMC management also denied interest in taking control of Intel’s production capacity.
Former Intel Directors David B. Yoffie (A Professor at Harvard Business School, Has An Extensive Background in High-Tech Business Strategy), Reed Hundt (A Former Chairman of the FCC) A former US TRADE REPRESENTATIVE), and James Plummer (A Professor of Electrical Engineering and Former dean of the School of Engineering at Stanford University, Has A Rich Semico Submission) Fortune condemns the idea of dealing with Intel production capacity to TSMC and calling to rotate it and sell it to a group of Western investors.
The TSMC -controlled semiconductor industry is significant risks. Concentrating the US leading semiconductor in the United States under a foreign entity can weaken US technology companies by creating almost a monopoly, former directors believe. While companies such as Apple, AMD and NVIDIA rely on TSMC today, they still take advantage of competitive pressure on the market created by Samsung Foundry and will be supported by Intel Foundry if the latter is successful. Intel presents a small competition for TSMC as there are only two production knots. However, if Intel disappears completely, US companies can face reduced negotiation power, former directors suggest.
Former Intel directors believe that the more strategic approach will be Intel to separate its production department from its design business. In fact, they go so far that the US government must require the company to rotate its production operations and sell them to a Western private investor group. In order to make this viable, Washington must provide a $ 10 billion capital as a capital that is not voting, similar to bank rescue in 2008, ensuring that taxpayers benefit if the venture succeeds. In addition, the major US semiconductor companies, including the Intel Design Department, must be committed to place orders to guarantee profitability. Former members of the Intel Board of Directors believe these measures would make the business attractive to investors while maintaining US semiconductor production opportunities.
On paper, the rotation of Intel production operations to an individual company sounds like a plausible idea. However, significant technological and business barriers are likely to prevent this to happen smoothly, if at all.
Intel’s FAB chain costs about $ 108 billion (maybe a little less if we deduct the costs of office buildings and other non-production assets). Finding an investor wishing to buy these production assets for its value will be difficult to put it lightly, as $ 100 billion transactions are not common.
Of course, it would be easier to convince a consortium of investors to invest in Intel Funder if a group of leading US companies would be committed to using their services for years to come. However, engaging in unknown foundry is a huge risk for companies such as AMD, Apple, Intel and NVIDIA, as this can slow down their progress and prevent them from growing. Something that happened with AMD’s commitment to Globalfoundries during the day.
The proposal to deal with the Intel production facilities to TSMC completely miss that Intel has its own process technologies – Intel 14NM (and more adult), Intel 10SF/10ESF, Intel 4 and Intel 3 – and already makes chips in large volumes. Also, the company is about to launch the production of a large volume of its Panther Lake and Clearwater Forest, with its 18A process technology and to receive 18A cartridges in the mid -2025. Intel Fabs Discussions to a separate entity, managed by TSMC, would harm the Intel talks with Intel negotiations.
But let’s assume that Intel and TSMC have agreed to form a joint venture to manage FABS on Intel. And that Intel continues to make chips of its Intel 4, Intel 3 and 18A technologies, but TSMC would also like to make chips of Intel. The transfer of TSMC production technology to Intel US Factory with EUV capabilities would be very complicated. Although both companies use EUV lithography, their equipment settings, FAB configurations and supplier -specific modifications differ significantly. ASML’s lithographic instruments, for example, are custom -made for any company. Intel and TSMC also have clear methods for the etching, delay and control of the processes, all of which influence manufacturing tools.
The joint venture would harm the TSMC profit margins. The only reason TSMC may consider working with Intel is if the Trump administration introduces tariffs forcing it to produce advanced 3NM and 2nm chips in the United States, but Intel lacks sufficient EUV production capacity to meet the demand for both its own products. Instead, TSMC accelerates its own Arizona Fabs to maintain 3NM and 2NM production, which is a more viable business strategy, as analysts in the industry suggest.
Even if the TSMC was forced to take control of the Intel capacity, its most advanced research would remain in Taiwan and over time it could close the Intel factories and fire the bigger part of its workforce.
It should be borne in mind that Intel also has an EUV capacity designed to produce Intel own products. TSMC is unlikely to be able to carry its nodes to production lines intended for Intel 14nm (and older) and Intel 10SF/10ESF (at least, not in a financially viable way). These production facilities cost billions for Intel as they produce selling products. For an external company (whether TSMC or a group of investors), they are unlikely to be as much value as Intel will remain the only customer for these nodes and FABS. In the meantime, at one point these factories will either have to be upgraded (which means additional investments) or close (something that former board members have mentioned above), which means unsubscribing billions of dollars.
