Intel, once a titan of Silicon Valley attempting to regain its status as the leading semiconductor company in America, is collaborating with the Trump administration on a strategy to hand over control of its chip manufacturing facilities to a prominent rival from Taiwan.
In recent months, Frank Yeary, who is currently the interim executive chairman of Intel, has engaged with officials from the administration and leaders at Taiwan Semiconductor Manufacturing Company (TSMC) regarding a plan that would divide Intel’s struggling manufacturing division from its semiconductor design and product segments, as revealed by four sources familiar with the discussions, who spoke on condition of anonymity.
TSMC, which is responsible for approximately 90 percent of the world’s most advanced semiconductors, would take over Intel’s manufacturing operations and secure a majority ownership, potentially alongside a consortium of investors that may include private equity firms and other technology companies, according to the four sources.
The Trump administration has been encouraging TSMC to pursue this deal. Howard Lutnick, nominated by President Trump for the position of commerce secretary, has been actively participating in the discussions, viewing them as one of the most significant challenges of his new role, as indicated by two individuals knowledgeable about the matter.
It remains uncertain how extensive TSMC’s takeover of Intel’s manufacturing operations would be or how much capital the Taiwanese firm would invest. The agreement could be restricted to Intel’s domestic facilities located in states like Oregon, Arizona, and New Mexico, or it might also encompass plants in international locations such as Ireland and Israel, say the sources.
Intel’s business outlook has deteriorated following its inability to develop smartphone and artificial intelligence chips. Despite the government’s attempts to support the company by promising billions in subsidies through the Biden administration’s CHIPS Act, Intel has continued to face challenges.
Both Intel and TSMC declined to provide comments. Mr. Lutnick did not respond to a request for his input.
In late 2022, Intel’s board reached out to TSMC to explore potential partnership opportunities, according to two of the sources familiar with those discussions. In January, TSMC’s CEO, C.C. Wei, met separately with Mr. Lutnick and Mr. Yeary to discuss the possibilities of their collaboration.
Since that time, Mr. Yeary has maintained regular discussions with Mr. Lutnick about the proposal, as noted by three sources. The Intel chairman’s interest in restructuring the company has also attracted attention from potential buyers interested in Intel’s product division, including Qualcomm, although a spokesperson from Qualcomm opted not to comment.
Some aspects of these discussions have previously been reported by Digitimes, a Taiwanese news source, and Bloomberg.
The pressing question is whether the Trump administration believes that a struggling national icon like Intel would be better served under foreign ownership or if a different approach needs to be sought.
“Even with possible support from the U.S. government via the CHIPS Act and officials eager to see the company recover and lead the advanced manufacturing resurgence in the U.S., the challenges ahead will be formidable,” remarked Paul Triolo, a partner at Albright Stonebridge Group who specializes in industry trends.
Over the negotiations loom significant questions regarding Mr. Trump’s stance towards the chip industry and Taiwan, which markedly contrasts with former President Joseph R. Biden Jr.’s approach. Mr. Trump has publicly criticized Biden’s administration for its investments in domestic chip production, suggested the imposition of tariffs on imported chips, accused Taiwan of siphoning off the U.S. semiconductor industry, and raised concerns about U.S. military support for the island facing threats from Beijing.
During remarks made to Republican lawmakers in late January, Mr. Trump asserted that a substantial tariff, rather than subsidies, would suffice to incentivize chip manufacturers to return to the United States.
“We want them to come back, and we don’t want to hand them billions of dollars like this absurd program under Biden,” the president expressed.
In his Senate confirmation hearing on January 29, Mr. Lutnick appeared to navigate a cautious path concerning the CHIPS initiative, describing it as “necessary and important” and a “down payment” towards revitalizing domestic manufacturing. However, he refrained from explicitly committing to uphold contracts already established by companies with the government.
To pacify Mr. Trump, Taiwanese businesses and officials have been fostering relationships with his associates, proposing new partnerships in the gas sector, and emphasizing the advantages of Taiwanese semiconductor production for the United States.
Taiwanese authorities are closely observing the negotiations about Intel’s future. TSMC’s supremacy in advanced chip manufacturing has emerged as what some analysts describe as a “silicon shield” that dissuades military aggression from China and bolsters support from the United States.
On Friday, Taiwan’s President, Lai Ching-te, announced that his administration would collaborate with local semiconductor companies to devise a strategy that addresses Mr. Trump’s concerns while safeguarding Taiwan’s role within the chip industry.
“The government of Taiwan will engage in ongoing dialogue and discussions with the semiconductor sector to formulate an appropriate strategy, followed by further discussions regarding proposals with the United States,” Mr. Lai stated during a press briefing.
TSMC could potentially satisfy Mr. Trump’s requests by simply enhancing its manufacturing capabilities in the U.S., as highlighted by Stacy Rasgon, a semiconductor analyst at Bernstein Research. TSMC, which has secured up to $6.6 billion in grants through the CHIPS Act, is developing three plants in Arizona and holds the capacity to expand in that region.
The suggestion of disbanding Intel highlights the drastic shift in the company’s fortunes. Established in 1968, it once claimed the title of the world’s most valuable semiconductor firm by designing and manufacturing chips for personal computers and data centers. However, in recent years, the company has faced obstacles in innovation and has lost market share to competitors like Nvidia, a leading producer of A.I. chips.
Pat Gelsinger, appointed as Intel’s CEO in 2021, vowed to rejuvenate the company by revitalizing its manufacturing division, yet these efforts met with setbacks. In November, Intel’s board compelled Mr. Gelsinger to resign.
Intel’s manufacturing arm, referred to as Intel Foundry, recorded an operational loss of $13.4 billion in 2024, with client sales plummeting by 60 percent. The previous year, the company disclosed plans to transition this division into an independent subsidiary.
With Intel’s stock price dropping nearly 50 percent in the past year, the potential breakup of Intel may render it susceptible to acquisition, warned Patrick Moorhead, founder of Moor Insights and Strategy, a technology research firm.
“The Intel we know would no longer exist,” he stated. “It would mark the definitive conclusion of an era.”
Chris Buckley contributed reporting from Taipei, Taiwan.
