Trump Administration Hesitant on TSMC’s Interest in Intel’s U.S. Factories

Background: The Trump administration appears to be reluctant to support Taiwan Semiconductor Manufacturing Co. TSM in its plans to acquire Intel Corp. INTC‘s U.S. chip manufacturing operations.

Current Developments: According to Bloomberg, TSMC, the world’s leading chipmaker, is considering taking a controlling interest in Intel’s U.S. factories at the urging of former President Donald Trump. However, a White House official informed Reuters that while the administration supports foreign investments in the U.S., backing a foreign entity in charge of Intel’s facilities is “unlikely.”

No confirmation has been given regarding any discussions or meetings about this potential deal.

Industry Context: Intel has struggled to reclaim its position in the chipmaking sector and is investing billions to pivot towards contract chip manufacturing. This transition remains a work in progress.

If TSMC were to take control of Intel’s factories, it would need to revamp the existing production methods. Each semiconductor company has distinct manufacturing processes, meaning TSMC would probably have to modify Intel’s operations to align with its own standards. This could necessitate sharing its proprietary methods with Intel staff.

Significance: The Trump administration’s reservation about TSMC running Intel’s U.S. factories reflects a broader initiative to enhance domestic semiconductor production capabilities.

The U.S. CHIPS and Science Act 2022 aimed to invigorate local semiconductor manufacturing through $39 billion in subsidies. However, reports indicate that the White House might revisit certain aspects of this legislation, which could delay some funding to the semiconductor industry.

As TSMC seeks to strengthen its foothold in the U.S., it also aligns with Taiwan’s strategy to bolster investments and chip production. The company is investing $65 billion in new manufacturing facilities in Arizona, in line with Taiwan President Lai Ching-te’s goals to boost trade and investment with the U.S.

On Friday, Intel’s stock fell by 2.2%, while shares of TSMC traded up by roughly 1%, according to Benzinga Pro data.

Analyst ratings from JP Morgan, Stifel, and Truist Securities, released on January 31, suggest an average price target of $21.67 for TSMC, indicating a potential downside of 8.2% based on the latest evaluations.

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Disclaimer: This content was partially produced with AI tools and has been reviewed and published by Benzinga editors.

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