Intel, a fallen Silicon Valley icon who tries to restore its reputation as the most prominent semiconductor company in America, cooperates with the Trump administration on a plan to transfer the operation of his chip-making factories to a gigantic Taiwanese rival .
In recent months, Frank Yeary, the interim -executive chairman of Intel, has spoken with administration officers and leaders of Taiwan Semiconductor Manufacturing Company about a deal that would separate Intel's distracting production company from its semiconductor design and product company, according to four people with knowledge of the plan, which spoke about the condition of anonymity.
TSMC, which is estimated to produce an estimated 90 percent of the world's most advanced semiconductors, would take over control of the production company from Intel and take a majority interest in the company in addition to a consortium of investors who can include private equity companies and other technology companies, said the Four people said.
The Trump government has encouraged TSMC to close the deal. Howard Lutnick, President Trump's candidate for the Trump secretary, has been involved in the conversations and regards them as one of the most consistent challenges of his new job, two of the people who are familiar with the discussions said.
It is not clear how much of Intel's production company TSMC would take over or how much money the Taiwanese company would invest. The deal can be limited to the domestic factories of Intel, in states such as Oregon, Arizona and New Mexico, or also include facilities in countries such as Ireland and Israel, the people said.
The business prospects of Intel were soured after it had not developed any smartphone and artificial intelligence reports. Despite the efforts of the government to breathe new life into the company by promising billions of dollars in subsidies via the BIDEN Administration Chips Act, Intel has continued to struggle.
Intel and TSMC refused to comment. Mr. Lutnick did not respond to a request for comment.
At the end of last year, the Intel TSMC board approached to gauge its interest in a sort of partnership, said two of the people who are familiar with the conversations. In January the CEO of TSMC, CC Wei, met separately with Mr Lutnick and Mr. Yeary to discuss how a tie could work.
Since then, Mr. Yeary has regularly spoken with Mr Lutnick about the idea, three of these people said. The interest of the Intel chairman to split the company has also opened the door for lovers who are interested in acquiring Intel's product activities, including Qualcomm. A spokeswoman for Qualcomm refused to comment.
Some details of the discussions were previously reported by Digitimes, a Taiwanese news output and Bloomberg.
The question now is whether the Trump administration thinks that a distressing national champion such as Intel is better off in the hands of a foreign company or that the administration should look for a different solution.
“Even with potential US government support of the chips act and officials who would like to restore the company and lead the Renaissance of advanced production in the US, the way will be difficult for us,” said Paul Triolo, a partner at Albright Stonebridge Group who follows who follows The industry.
Hanging about the negotiations are questions about the approach of Mr Trump of the chips industry and Taiwan, who differs greatly from the strategy of former President Joseph R. Biden Jr. Mr. Trump has criticized the investments of the Biden government in domestic chip production, threatened to impose rates on foreign chips, accused Taiwan of stealing the semiconductor industry away from the United States and asked the US military support for the island , that tries to defend himself against Beijing's attack.
In comments to the Republican legislators at the end of January, Mr Trump said that a significant rate, no subsidies, everything was needed to force chip companies back to the United States.
“We want them to come back, and we don't want to give them billions of dollars such as this ridiculous program that Biden has,” said the president.
In his hearing on January 29 Senate, Mr. Lutnick seemed to be a careful line on the Chips program. He described it as “necessary and important” and a “down payment” to bring production back to the United States. But Mr Lutnick refused to fully commit himself to honoring contracts that companies had already signed with the government.
To calm Mr Trump, the Taiwanese officials and entrepreneurs have cultivated ties with people in his job, floating new deals in the gas sector and try to explain how the Taiwanese semiconductor production benefits the United States.
Taiwanese officials also follow the conversations about the future of Intel. For Taiwan, the dominance of TSMC of advanced chip production has become, which some commentators call a “silicon shield” that is decreasing military action by China and encourages support from the United States.
The president of Taiwan, Lai Ching-Te, said on Friday that his government would collaborate with the semi-conductor companies of the island to develop a strategy to tackle the grievances of Mr Trump and at the same time Taiwan's role in the chip sector protect.
“The government of Taiwan will be in mutual contact and discussions with the semiconductor sector to formulate the correct strategy, and then there will be further deliberation about the proposals with the United States,” said Mr Lai in a press conference.
TSMC could tackle Mr Trump's requirements by simply building more production capacity in the United States, said Stacy Rasgon, a semiconductor analyst at Bernstein Research. TSMC, which received up to $ 6.6 billion in subsidies from the Chips Act, builds three factories in Arizona and has the possibility to expand there.
The idea of breaking out Intel talks about how much the fortunes of the company have changed. Founded in 1968, the world's most valuable semiconductor company by designing and producing chips for personal computers and data centers. But in recent years the company has had trouble innovating and giving off to rivals such as Nvidia, the dominant maker of AI chips.
Pat Gelsinger, who was appointed CEO of Intel in 2021, promised to reverse the company by breathing new life into the production company, but staggered the effort. In November, the board of Intel forced Mr. Gelsinger to resign.
The Intel production company, which calls the Intel Foundry, reported an operational loss of $ 13.4 billion in 2024, because customers' turnover fell by 60 percent. Last year the company said that it was planning to turn the company into an independent subsidiary.
With the stock price of Intel in the past year almost 50 percent fell, splitting Intel could make it vulnerable to a takeover, said Patrick Moorhead, founder of Moor Insights and Strategy, a technical research agency.
“Intel as we know, it would cease to exist,” he said. “It would be the absolute end of an era.”
Chris Buckley Bring reporting from Taipei, Taiwan.
