As the U.S. government ramps up its ‘Made in America’ chip policy, concerns are rising that Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, might be caught in the geopolitical crossfire. Under pressure from the Trump administration, TSMC faces increasing demands to collaborate with Intel, raising questions about the future of global semiconductor manufacturing.
Intel’s Struggles and U.S. Pressure on TSMC
The Trump administration’s push for semiconductor self-sufficiency has intensified, especially as Intel, once the pride of U.S. chip manufacturing, struggles to keep pace with competitors like TSMC and Samsung Electronics. To bolster domestic chip production, the U.S. is reportedly pressuring TSMC to collaborate with Intel, potentially through a joint venture or equity acquisition.
However, industry experts see a low likelihood of TSMC acquiring Intel’s foundry operations. Moon Jun-ho, a researcher at Samsung Securities, pointed out, “The acquisition of Intel’s factory by TSMC is likely to raise antitrust issues,” noting that only TSMC, Intel, and Samsung are currently capable of mass-producing chips below the 5-nanometer threshold.
Market Dynamics and Potential Antitrust Issues
According to market research firm TrendForce, TSMC’s revenue share in the pure foundry market hit 65% in Q3 of 2024. Intel, which claims to be the second-largest foundry when internal production is considered, would form a combined market share of nearly 70% if merged with TSMC, potentially triggering antitrust scrutiny.
Challenges Facing a TSMC-Intel Partnership
Despite geopolitical pressure, a joint venture between TSMC and Intel is far from guaranteed. Financial constraints loom large for Intel, which recently scaled back its 2025 capital expenditure plans. Additionally, cultural and operational challenges are evident, as TSMC faces difficulties ramping up production at its Arizona fab due to organizational differences between its Taiwan headquarters and U.S. personnel.
“There are doubts about whether synergy can be achieved with Intel’s workforce,” remarked Moon, highlighting the challenges of integrating operations between the two semiconductor giants.
Two Possible Scenarios: Technology Collaboration or Strategic Partnership
Industry insiders foresee two main scenarios:
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Technology Collaboration Under U.S. Pressure: TSMC could be compelled to share its cutting-edge chip production technologies with Intel. With TSMC dominating the advanced process market, the U.S. government may leverage Taiwan’s geopolitical vulnerabilities—particularly fears of Chinese military aggression—to pressure TSMC into technology transfers.
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Strategic Partnership in Packaging: TSMC might partner with Intel’s packaging division, subcontracting some packaging orders to Intel. “This is the most realistic scenario given TSMC’s existing collaborations with OSAT companies in Taiwan and the U.S.,” noted an industry expert. However, this approach is unlikely to significantly bolster Intel’s advanced process capabilities, offering only a partial solution to its foundry challenges.
Taiwan’s Concerns: Losing Semiconductor Hegemony?
The political implications of a TSMC-Intel collaboration are also causing unease in Taiwan. Yang Ying-chao, chairman of Kirkland Capital, commented, “From a business perspective, it is irrational for TSMC to establish manufacturing plants with Intel. However, politically, it makes sense given cross-strait tensions.” He warned that technology transfers to U.S. companies could erode Taiwan’s dominance in the foundry sector.
Global Chip Wars: What’s Next for TSMC?
As TSMC navigates U.S. pressure, Intel’s struggles, and geopolitical uncertainties, the future of global semiconductor manufacturing hangs in the balance. The unfolding narrative could reshape the industry, influencing technology supply chains and international relations alike.
