Bloomberg News reported on Friday that Taiwan's TSMC, the world's largest chipmaker, is considering acquiring a controlling stake in Intel's chip manufacturing plant at the request of U.S. government officials.
Bloomberg cited people familiar with the matter as saying that government officials raised the idea of a deal between the two companies in recent meetings with TSMC executives, and TSMC was open to it.
Negotiations are still at a very early stage and the exact structure of the potential partnership has yet to be determined. But the expected result is that TSMC will fully operate Intel's semiconductor factories in the United States.
Such a deal could significantly improve Intel's financial performance.
"Combining TSMC's expertise and engineers with Intel's infrastructure could help jump-start the dream of making the United States the center of the chip industry again," said Brian Jacobson, chief economist at Axis Wealth Management.
Such a deal would require significant concessions from both sides.
Intel is one of the few chipmakers that both designs and manufactures semiconductors, but its manufacturing processes have lagged behind those of TSMC. TSMC is now the world's largest contract chip manufacturer, with a market capitalization about eight times that of Intel.
The capital-intensive manufacturing strengthening strategy advocated by former Intel CEO Gelsinger has consumed a large amount of Intel's cash flow. The company has high hopes that the 18A chip manufacturing technology will begin mass production of chips in the second half of this year.
It's unclear whether Intel is willing to pursue the deal.
Intel's interim executive chairman, Frank D. Yeary, has been leading discussions with potential suitors and Trump administration officials who worry about the fate of a company seen as critical to national security. Jerry has been telling those around him that his top priority is maximizing Intel shareholder value.
Intel is one of the biggest beneficiaries of the U.S. push to localize key chip manufacturing. During the previous administration, Intel received $7.86 billion in government subsidies and billions of dollars in government contracts.
The Wall Street Journal reported on Saturday that TSMC and Broadcom were both considering a deal that could split the U.S. chip manufacturing giant in two.
Broadcom has been keeping a close eye on Intel's chip design and marketing operations, adding that it had discussed a potential acquisition offer with its advisers but would only proceed if it found a partner for Intel's manufacturing operations.
The Trump administration supports foreign companies investing and building in the United States but is unlikely to support foreign entities operating Intel's U.S. chip factories, a White House official told Reuters on Friday.
