By Arshheeya Bajwa
(Reuters) -President Donald Trump's administration may not support Intel's US chip factories operated by a foreign entity, a White House official told Reuters.
The comment was in response to the Bloomberg report that TSMC Taiwan, the world's largest chip maker, was considering taking a control stake in Intel factories at Trump's request.
The White House Officer said the Trump administration supports foreign companies investing and building in the US but was “unlikely” to support an overseas company operating Intel factories.
Earlier, Bloomberg had reported that Trump's team raised the idea of a deal between the two companies in recent meetings with TSMC officials, and were prepared to accept, identifying someone who is familiar with the matter.
The White House Officer did not immediately comment and Trump's team met the companies and raised the idea of such a deal. The officer did not immediately respond to follow -up questions about whether TSMC could be associated with Intel factories through a joint entity headquartered in the United States.
Such a deal, which is still uncertain, could throw financial redemption into Intel, which has struggled to restore its lost chip glory as it fails to take advantage of AI boom and pour billions of dollars to become a contract chip manufacturer – a transformation and yet to realize.
Intel's shares closed 2.2% on Friday, while TSMC's listed shares closed around 1%.
It is unclear whether Intel is open to a transaction, according to Bloomberg, and the arrangement may include getting large American chip designers to take equity poles, along with support from the US Government. The report added that it meant that the initiative alone would not own a foreign company.
Earlier in the week the research company Baird announced a note saying that Intel factories could be spinning into a new entity, which is jointly owned by Intel and TSMC, with TSMC engineers helping to make the factories viable .
“Intel would benefit from significant cash flow relief, and would focus on design and platform solutions going forward, while a viable son could finally attract key legends companies to diversify to Geo-dependent manufacturing mode,” Baird said the note.
Such a deal would need deep concessions on both sides.
If TSMC received an arrangement to run Intel factories, it would have to make significant changes to the operations of the US chip maker because each chip manufacturer has specific methods and techniques for operating factories.