The Trump administration is reportedly unlikely to back Taiwan Semiconductor Manufacturing Co. TSM taking over Intel Corp.INTC U.S. chip factories.
What Happened: TSMC, the world’s largest chipmaker, is considering acquiring a controlling stake in Intel’s U.S. factories at the request of former President Donald Trump, according to Bloomberg.
However, a White House official told Reuters that the Trump administration welcomes foreign investment and construction in the U.S., but is “unlikely” to back a foreign company running Intel’s factories.
The White House official did not publicly confirm whether any meetings occurred or if a potential deal was ever discussed.
Intel has been struggling to regain its lost chipmaking prominence and has been investing billions of dollars to become a contract chip manufacturer, a transformation that has yet to materialize.
If TSMC were to take over operations at Intel’s factories, it would face the challenge of overhauling the U.S. chipmaker's existing processes.
Since each semiconductor manufacturer follows unique production methods, TSMC would likely have to adapt Intel's facilities to its own standards, potentially requiring the disclosure of proprietary techniques to Intel personnel.
Why It Matters: The Trump administration’s stance on TSMC’s potential control of Intel’s U.S. factories comes amid a broader push to strengthen domestic semiconductor production.
The U.S. CHIPS and Science Act 2022, which aimed to bolster U.S. domestic semiconductor production with subsidies worth $39 billion, is reportedly up for renegotiation by the White House, potentially leading to a delay in some semiconductor disbursements.
Meanwhile, Taiwan Semiconductor is looking to expand its presence in the U.S. amid Taiwan’s push for larger investments and advanced chip production.
The company is investing $65 billion in new factories in the U.S. state of Arizona, a move that aligns with Taiwan President Lai Ching-te’s plans to invest more in and trade more with the U.S.
On Friday, Intel's stock dropped 2.2%, while U.S.-listed shares of TSMC gained approximately 1%, according to data from Benzinga Pro.
The 3 most-recent analyst ratings were released by JP Morgan, Stifel, and Truist Securities on Jan. 31. With an average price target of $21.67 from JP Morgan, Stifel, and Truist Securities, there is an implied downside of 8.2% based on these latest analyst ratings.
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