What do you think of this idea that seems to be behind Intel's recent surge in price?
What do you think of this idea that seems to be behind Intel's recent surge in price?
While promising to enhance American manufacturing capabilities and supply chain security, concerns over competition dynamics, technology sharing, and government intervention could complicate execution. (ya think?)
Intel-TSMC partnership: potential semiconductor power shift?
Vyra Wu, DIGITIMES Asia, Taipei
Friday 14 February 2025
The semiconductor industry is bracing for a potential shake-up amid reports that the US government is pushing for Intel to spin off its manufacturing operations into a new entity, with TSMC participating in a joint venture. TSMC, which controls more than 60% of the global foundry market, would bring its technical expertise and manufacturing leadership to the venture. If realized, this move could alter the global semiconductor supply chain, reshaping alliances, competitive dynamics, and technological leadership.
According to Luke Lin, senior analyst from DIGITIMES Research, operating advanced process foundries requires more than just technology transfer; it also demands a complete set of factory operations and business management. As a result, TSMC would need to take control of Intel's foundries and spend at least two to three years making necessary adjustments.
With Washington prioritizing domestic chip production through the CHIPS Act, this proposed restructuring would bolster US technological self-sufficiency. Intel, once the undisputed leader in semiconductor manufacturing, has struggled to keep pace with TSMC's cutting-edge nodes. The spin-off would allow Intel to offload its capital-intensive foundry operations while ensuring that critical chip production remains within US territory.
Lin suggests a specific equity distribution in which TSMC would hold 40% to address concerns from various stakeholders. Major US clients such as Apple, Nvidia, AMD, Qualcomm, and Broadcom would collectively contribute 20–30%, while Intel would hold 30–40%. Since Intel's stake in the joint venture would be less than 50%, the company may choose to forgo US government subsidies if the relevant provisions in the CHIPS Act cannot be amended.
For Washington, this approach addresses several key objectives. It would secure domestic production of advanced semiconductors, reducing reliance on foreign supply chains while maintaining US control over a critical industry. The joint venture would focus solely on Intel's US foundries, excluding any facilities outside the US, though TSMC's Arizona plant could potentially be included. With a government-backed entity overseeing operations, policymakers could directly shape the strategic direction of the industry while leveraging external technological expertise.
At the same time, the issue of technology transfer remains a major concern, as leading manufacturers have built their competitive edges over decades of research and development. Ensuring that proprietary knowledge remains protected while fostering collaboration could prove difficult. Additionally, operational and cultural differences between participating entities could create management complexities, as foundries operate under distinct business models.
The potential partnership could dramatically alter competitive dynamics across the semiconductor industry. Samsung Electronics, currently holding 9.3% of the foundry market, could face mounting pressure as the new entity combines Intel's extensive US presence with TSMC's technical prowess. At the same time, Samsung's US fab may see fewer orders—particularly as it was vying with Intel for certain deals—further marginalizing its position.
At a regional level, Taiwan's semiconductor ecosystem could experience talent and technology migration, potentially weakening its global standing. However, according to Luke Lin, this shift might actually bring unexpected benefits to Taiwan. While public attention often focuses on the potential decline in Taiwan's global semiconductor market share and influence, Lin points out that expanding TSMC's US operations—whether through acceleration of its own plans or taking over Intel's facilities—could help address two critical challenges Taiwan currently faces.
First, with 80-90% of TSMC's production and operations concentrated in Taiwan, the island faces significant resource constraints. The company's operations place enormous demands on local water and electricity supplies, while its dominant position in the labor market has created intense competition for skilled workers. Redistributing some of this pressure through US expansion could help alleviate these strains.
Second, Lin emphasizes that Taiwan's heavy concentration of advanced wafer fabrication creates a single point of failure risk in an increasingly uncertain geopolitical environment. Rather than serving solely as a protective shield, this concentration could potentially incentivize bold or reckless actions by various parties. Geographic diversification through US expansion could help mitigate this risk.
If the restructuring moves forward, it is expected to shift the balance of power in the global semiconductor industry. The US sector would gain increased domestic production capacity and greater supply chain security, reinforcing Washington's push for technological independence.
The establishment of a US-led semiconductor manufacturing entity would mark a pivotal moment for the industry. While promising to enhance American manufacturing capabilities and supply chain security, concerns over competition dynamics, technology sharing, and government intervention could complicate execution. (ya think?)
https://www.digitimes.com/news/a20250213VL207.html?mod=2 |
