TSMC Faces Tough Choices Amid Rumors for Intel Foundry Collaboration
79 comments
·February 13, 2025Winblows11
JumpCrisscross
> When US can't compete, they have to blackmail/steal/sanction to rescue their failed corporations
Obsolete framing. This would be happening even if Intel were competitive. We’re shifting into a nationalist (possibly kleptocratic) economic footing. Previously, we were friendshoring. This administration doesn’t discriminate between friend and foe.
fransje26
> We’re shifting into a nationalist (possibly kleptocratic) economic footing.
From that point of view, it is probably in TSMC's best interest to not hand over their IP..
JumpCrisscross
> it is probably in TSMC's best interest to not hand over their IP
Absolutely not. TSMC, ironically, can outlast Trump. Unfortunately, Taipei may not be able to.
selectodude
In fact we seem to be keeping our enemies closer.
delusional
I think it's a framing from somebody outside the US. The current US administration didn't just happen. When you could no longer compete under the terms you yourself set. You decided to elect a nationalist leader that would flip the table.
It's a framing that doesn't let the American public distance themselves from their own elected officials. He is your president.
JumpCrisscross
> When you could no longer compete under the terms you yourself set. You decided to elect a nationalist leader that would flip the table
This is the mistake. This isn’t industrial strategy. It’s part messaging tantrum part pursuit of autarky.
America could have been winning, and in some domains it is, but that doesn’t matter because the political question is how those gains are divided inside America.
> a framing that doesn't let the American public distance themselves from their own elected officials
Nobody is doing that. The point is America is grabbing irrespective of whether it’s winning, and without any particular coherence.
netcan
> On the other hand, if TSMC rejects the proposals, the U.S. government could impose a 100% tariff on chips made in Taiwan.
Seems like a bluff... at least taken literally. Is the US really going to put a 100% tax on the core component of the computing industry?
If this actually played out it would be pretty bad for the US economy.
I suppose the unstated implication us that the US could just take the IP by force.
newsclues
If the US bluff is give us what we want or we pull our security guarantee and China invades and you are forced to blow the fabs and move your engineers.
That hurts the US access to chips, short term. But then who is going to fill the demand and where will the talent migrate, and who else is going to build the capacity ($$$)?
bradchris
> I supposed the unstated implication is that the US could just take the IP by force
Isn’t that what China’s stated plan is?
aprentic
They're extremely careful not to state that as their plan.
In general, they make a huge effort not to talk about their plans vis-a-vis Taiwan at all. They just keep repeating that Taiwan is part of China.
The closest they come to stating that they plan to use force is that they'll sometimes say that they won't reject the use of force.
Given that nobody has proposed a scenario where China actually could do something like "take the IP by force" (since the IP would be gone if they ever tried to invade) and we can generally see that the Chinese leaders aren't complete idiots, it seems highly unlikely that they're planning an invasion any time soon.
outside1234
I mean, we have a total moron as a leader, so I wouldn't rule out totally insane things like a 100% tax.
Swoerd
You're selling him short, he's also a felon, sexual predator, fraud, grifter, traitor, conman, Demagogue and Narcissist.
ericmay
> When US can't compete, they have to blackmail/steal/sanction to rescue their failed corporations.
Name a country where this doesn't occur. The US is not the only country in the world by a long shot that doesn't take measures to protect their failing corporations or export products.
> The same stealing accusation they level at China.
Well they've leveled the accusation against China and nothing changed. So what should the United States do? Continue to let it happen or do something about it? Unfortunately global fair/free trade requires all participants to participate in good faith. If the second largest economy is going to actively undermine that system it just won't work.
snailmailstare
The US spent a long time arguing for globalization and free trade, proposing all the treaties, etc, but the US isn't a real republic so anything its signature is on is worth dirt.
liuliu
Taiwan is not China.
somat
Yes it is, it's the PRC(West Taiwan) that is not China.
Realistically, I get your point and you are correct, but also wanted to point out how politically tricky the whole situation is. Hell, depending on how you define successor states. I could make a good argument that neither is actually China. I would be wrong, but could make a good go at it.
elefanten
GGP referenced US accusations against China
impossiblefork
Hardly any countries do this. It's only really the US which has had the soft power to behave in this way.
alephnerd
Taiwan added similar ToT clauses when they backed TSMC, UMC, PSMC, and others back in the 1980s-2000s.
Intel is absolutely lobbying for this to hamper TSMC, but Taiwan's industrial policy ain't a saint either. At least this spurs some amount of Capex spending in the US.
fritzo
Agreed. I learned much from Joe Studwell's book "How Asia Works" (2013), where he argues that among countries in the Asian region, those whose economies flourished were those with protectionist trade policies and export discipline, leading to the creation and honing of domestic industry.
alephnerd
It's more prosaic than that. It's just helping local donors and closely aligned businesses.
A lot of the "ministerial advice" story (the uber powerful ITRI, METI, etc) is to a certain extent a rewriting of history. A major reason why these bureaucratic orgs were so successful in Asian countries was explicitly because of the revolving door - after your 20 year stint at ITRI or METI, you'd join as an advisor for one of the affected companies or start your own consultancy.
This isn't to say that they made bad choices (they didn't), but it absolutely was done due to collusion between regulators and businesses.
The Trump-era "politician aligned businessman" model is the norm across Asia - it's a major reason why Morris Chang lobbied against the CHIPS act, Hyundai lobbied against easing automotive tariffs, Tata lobbied for 5% sales tax on EVs but 25% sales tax on Hybrids and 50% on ICE, etc.
The Asian Model of Development is predicated on "Access Money" to use Yuen Yuen Ang's typography of corruption.
SecretDreams
Yeah. TSMC is the best right now. But they achieved that for a variety of reasons, including a very supportive Taiwanese government. The other major reason was Apple really saved their ass when they moved over from Samsung. The third reason is Intel really did fuck up under the Brian years.
richardw
Ok go ahead and impose the tariffs. That will be the shortest, sharpest lesson in economics and leverage, transferring tech profits to government and forcing allies to realign. TSMC is not TikTok.
fransje26
Fingers crossed they do.
It's going to be a costly, painful lesson for everybody involved, but it could be a salvatory action that helps slow-down the frightening nonsense building up in the US.
coliveira
The problem for TSMC is that they're in a weak position. They cut themselves from China, so what other options they have other than do what the US wants? A smart person could see this result from a mile ahead, first with Biden's insistence that it set plants in the US. The whole idea was always the forced IP transfer to US companies.
richardw
They’re very exposed and the only way Taiwan independence survives is by keeping IP and skills locked up on the island. What you can bet on is if Intel had the goods, Trump would say “meh, let’s deal” to China. Compared to that, what cost is a tariff or two?
If I were Taiwan, I’d say “give us nukes and a couple subs, then you get our best factories”. The US nuclear umbrella is now less of a guarantee and countries need to own their security.
MangoCoffee
"Real men have fabs." – Jerry Sanders.
TSMC - "You don't need to manage your own fabs. Let us do it for you and just focus on what you do best."
Intel kept its fabs, which certainly gave it many advantages, until Intel's tick-tock model failed. Now, America is crying about its own failures and wants to punish others for their success.
It makes America look bitter.
osnium123
If proposal 2 goes through, it means that Intel will shut down any development activity in Oregon and rely only on TSMC for next generation technology. It might be warranted given Intel abysmal track record for developing nodes but still unfortunate for the thousands of engineers who will get let go.
Moto7451
It’s worth noting that this is just the current winds of change with the current administration and not how the US has always acted. Every major economy uses tariffs. This particular use of tariffs is the Trump Administration v1 and v2’s preferred magic hammer for whatever nail they want to hit.
code51
How convenient that insiders jumped on INTC with this "rumor" 3 days ago.
They made about 25% from this in 3 days. Easiest money from a rumor.
sharpshadow
Apart as mentioned the tariff is a bluff, it’s clear which option TSMC has to take isn’t it?
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UncleOxidant
> 3. Allowing Intel to handle the packaging process for TSMC's Arizona-based operations.
WTF does that achieve? TSMC fabs all the advanced chips and Intel becomes just a packager? Window dressing.
inverted_flag
Currently, all the Arizona-made chips have to be sent back to Taiwan for packaging, which defeats the purpose of having the fab in the US in the first place.
nullbyte
Hmmm that's an important point
silisili
For anyone else like me who wasn't familiar with what semiconductor packaging is -
https://news.skhynix.com/semiconductor-back-end-process-epis...
georgeburdell
Packaging is gobbling up more and more of the backend process, especially for chiplets.
catlikesshrimp
What would be the result of the 100% tariff? Making the imports more expensive OR buying even more tech from China.
The second one sounds like the worst possible result I can Imagine.
Stablishing the packaging plant in the US sounds like the best option. The US would be copying what China does, but much better than partnering with a US company in the fab space. Technology transfer is unacceptable for Taiwan's survival (geopolitics)
budududuroiu
Honestly, Taiwan should just start selling export controlled chips to China. Trump kicked UA to the side, he’ll do the same to TW, might as well make a buck while at it, China is gonna catch up sooner or later anyways
colechristensen
I really can't think of an upper bound for US response to an action like that.
budududuroiu
The TW legislative is controlled by a slim majority that would support a rehash of the CSSTA [1], with the runner up for the presidential race calling for it on the campaign trail. The US is already far behind on weapons deliveries and owes TW more than $20bn in delayed weapons shipments. I don’t see the lower bound to what the US response might be
[1] https://en.m.wikipedia.org/wiki/Cross-Strait_Service_Trade_A...
bloomingkales
This sounds like a “reciprocal” play against China. Everyone has been saying China uses this tactic to steal IP. The dirty little secret is that they did this to Tesla (suddenly they have all this homegrown EV tech after they let Tesla into the country), and I think Elmo is pissed. The other dirty not so secret is that Deepseek just trained against OpenAI (stole it).
It’s a Cold War.
amluto
Was there actually interesting EV tech to steal? Even when Tesla was new, there were various experimental EVs around, and it wasn’t that hard to build one. Tesla’s real innovations seem to have been packaging existing 18650 cells into giant packs in an economical manner and putting everything together into a package that looked nice.
And now there’s BYD, which, as I understand it:
- Uses a highly integrated drive system that does not have any particular resemblance to Tesla’s
- Uses prismatic LFP cells. Those cells and battery packs are very different from what Tesla uses, at least in the US. And Tesla has never actually been a heavyweight in the battery tech space despite periodic PR pieces from management.
The rest is … just a car?
What did BYD steal from Tesla exactly, other than market share?
bloomingkales
https://news.bloomberglaw.com/us-law-week/tesla-trade-secret...
Before you go “well how could two people cause all of this”, it’s the two people we heard about.
There’s no suing in China to protect your shit.
JumpCrisscross
> China uses this tactic to steal IP. The dirty little secret is that they did this to Tesla
China bought its way into batteries by buying our bankrupt A123 [1]. We weren’t fleeced, we gave it away.
> It’s a Cold War
It’s a stupid Cold War. Literally search public property records for mortgage liens and join to senior people who have just been fired. Offer them a consulting contract so they don’t even know they’re an intelligence asset.
notahacker
> It’s a stupid Cold War.
Yeah. Short of nuking themselves, the US couldn't really be trying harder to lose in every possible aspect right now.
notyourwork
Did Deepseek steal anything or use what was made available publicly? I don’t agree that theft took place.
bloomingkales
I don’t know. Imagine a giant library, and a big corporation comes and steals it (OpenAI training on the internet/books). Then imagine another corporation comes and walks into the stolen library and scans each book so they have a copy (of the whole library ).
The reason you don’t consider it theft is because we’re into deep level treachery here where right and wrong are beyond blurred.
Just to add a slight bit of friction to all of this, I’ll just note that money and profit is involved. Lots of it.
But when I said I don’t know, I really meant it. It seems obvious to me, but how could it be that obvious? I must be going crazy.
alephnerd
There were murmurs about something like this even during the Biden administration. There is bipartisan support for bringing as much manufacturing capacity back to the US as possible - especially in packaging which is almost entirely outsourced because of unit economics and outsized subsidies by APAC players.
The main difference is that a lot of the hardball tactics flew under the radar during the Biden admin.
Also, Taiwan ain't China.
7speter
This was probably drawn up as an option, but is everyone here gonna ignore that theres a new administration in the whitehouse and Intels previous CEO (who, at least publicly, was very optimistic that Intel could pull a turnaround all on its own) was recently ousted?
alephnerd
Intel's leadership has been lobbying for this at a bipartisan level for almost half a decade now. This saga has been going on since 2018-19 and Pat Gelsinger is himself Republican leaning.
bluGill
Chips are too imporant to modern war for any country to be unable to make them. I mean the entire chip not just a part. the entire chain from raw minerals to a complete circuit board needs to be in your county. don't forget to design the above too.
Small countries better join something like the eu and nato because they cannot ro alone.
bilbo0s
Just being a pedant, but technically, Taiwan is not China.
Having said that, yeah, it's not too hard to see a future where asian nations begin to see a lot more possibilities in cooperation than they see in competition with each other.
Just as they have a right to develop their strategic postures, we, also, have a right to adjust our posture to serve us best in the largest possible number of future outcomes.
pests
> Just being a pedant, but technically, Taiwan is not China.
I think this is wrong? Both PRC and ROC claim ownership of all of China, including Taiwan. The PRC calling Taiwan a rouge territory and the ROC claiming to be a government in exile.
The ROC has never denied otherwise as claiming to be sovereign would upset the balancing act they play.
To sum it up, I would say the official position of Taiwan is that it is China.
catlikesshrimp
Taiwan is ROC (republic of china) China is PRC (people's republic of china)
Until the day China finally invades Taiwan and stablishes its laws there.
> U.S. government has proposed three potential cooperation options to TSMC
> 2. TSMC joining other firms as investors in Intel Foundry Services (IFS), a division being spun off from Intel, with TSMC transferring its technology as part of its shareholder role.
> On the other hand, if TSMC rejects the proposals, the U.S. government could impose a 100% tariff on chips made in Taiwan
When US can't compete, they have to blackmail/steal/sanction to rescue their failed corporations. The same stealing accusation they level at China.