US reportedly forcing TSMC to buy 49% stake in Intel to secure tariff relief
262 comments
·August 5, 2025cherryteastain
Tariffs kinda make sense when you have a deficit in a widely available item. Big trade deficit with Bangladesh? Sure you can buy cheap textiles from Thailand or Vietnam or something.
Unfortunately this approach does not work when you lack a viable domestic alternative and you're up against a monopoly.
What will the US do if TSMC does not blink? Not buy TSMC made chips? Obviously that is impossible, so the logical conclusion is that American consumers will end up paying the tariffs.
mrtksn
Yes it's a tax on consumption and when applied to everything the same way it's essentially a VAT. The admin keeps telling that EU will pay, India will pay but at best they can do is to weaken their currency so the goods become cheeper and it compensates for the tariffs US importers pay.
Arguably, US consumers are super consumers and maybe it will be better for everyone if Americans consume a bit less? I don't think that it should be necessarily bad for business, maybe it's time to switch to world building instead of consuming, maybe as so many people works so hard we as species should gradually move on to use our output for longer and enrich our lives with each new tool instead of consume more and more and keep working the same or more. Eastern Europeans are or used to be a bit likte that, have a slow paced life, have low GDP output, on paper economy and everything is bad but actually have a great life if you have a house with a garden and some stuff you bought 30 years ago and still functioning good enough.
tw04
>so the logical conclusion is that American consumers will end up paying the tariffs.
That’s been the point all along… they are significantly raising taxes on the bottom 90% of Americans and most are too stupid to even understand it. Gotta pay for those tax cuts for the wealthy somehow.
nosignono
It has nothing to do with stupidity. Stop painting people as idiots because they exist in one of the most information hostile environments in human history.
This isn't some natural state that's unrecoverable. The people you describe have been given a highly addictive media environment tailor made to engender outrage and drive behavior. It shouldn't be a shock when most people cannot resist it. The first step to changing it is not writing them off or insulting them for being had.
mattbillenstein
In a way it kinda does though - like definitely the information ecosystem distorts things, but some people do not have (or do not exercise) the critical reasoning skills to decipher what's true from what's not. Or what issues are actually important from those that are meant to just distract - not everyone can tell the difference and see how the incentives actually point to what's going on. reply
bsoles
Those people may not be innately stupid in the sense of not being able to learn or understand things. But they have been rendered functionally stupid by the media, propaganda, and politics. I actually find that state quite unrecoverable.
DiddlyWinks
At this point they're not "being had." They are deliberately and belligerently ignorant. It's way past time to stop giving anyone a free pass on supporting this malevolent clown.
tw04
> It has nothing to do with stupidity. Stop painting people as idiots because they exist in one of the most information hostile environments in human history.
No. Someone refusing to spend 30 seconds understanding how a tariff works is the result of an idiot. My 10 year old figured out how they work in under 5 minutes. There’s literally no excuse for a grown ass adult to refuse to educate themselves on the subject.
“This media environment” doesn’t prevent them from typing “how do tariffs work?” in their search engine of choice and reading the first result.
gjuggfdd
[dead]
heraldgeezer
Just like how overweight and obese people are "victims". Allow me to laugh.
At some point it is the individual. (I recently lost my COVID kilos, 10-15kg. Was easy. Stop drinking beer. Skip meals. Then again adhd brain makes it easy loll xd)
At some point the Trump voters need to suffer.
null
mathiaspoint
If there's one product we have domestic alternatives to it's semiconductors. We're a couple nodes behind TSMC. Using US only foundries or paying a premium for TSMC is not the end of the world.
J_McQuade
More people need to hear this. Similar argument when they tried to stop China from buying certain types of silicon - "Oh well... anyway!".
I am not American, nor am I Chinese. Both of those countries have the capability to make enough compute to do whatever the hell they want. I am, however, European...
DiddlyWinks
Really? I was not under the impression that we had anything truly competitive. Could we make an iPhone, for example, using only U.S.-made chips?
lanthissa
tsmc(taiwan) will blink for the same reason europe did and japan did, and for the same reason india and brazil did not.
when you take a step back and look at the deal breakdown, this is protection money not a trade negotiation.
ezst
With this administration, it's probably just more blackmail, in the form of "it would be a pity if nobody came to the rescue when China eventually puts its Taiwan plans in motion! (Not that playing ball is a guarantee of anything either)".
Dr4kn
Every promise of this administration is worthless, so why even bother? Either they protect you, because they don't want the chip tech to fall to China or they don't.
Buying half of Intel isn't going to change anything
ethbr1
The meta of Trump mercurialness is convincing counterparties they should do whatever they can to make him happy, even on unrelated matters.
I think it's a braindead, 4th-grade way to run international negotiations, but it is a way.
bit1993
> it would be a pity if nobody came to the rescue when China eventually puts its Taiwan plans in motion!
Wouldn't that just mean that Taiwan has to choose between two villains, and China can take the advantage of this by changing its narrative and taking the position as a hero, protecting Taiwan from the US.
jfengel
Taiwan really, really does not want to be part of China.
Or rather, they see themselves as the legitimate government of China, which is undergoing a temporary Communist junta. The separation was extremely violent. I mean, you saw the Three Body Problem.
The US fosters this, to retain a toehold there. Taiwan doesn't exactly love us for it, but they know which side their bread is buttered on.
ahmeneeroe-v2
This isn't blackmail. A security guarantee has value. Exactly what value is hard to say since the US is the only credible seller of such guarantees in this world order
cnst
Whose security are we talking about here, though?
Wouldn't the value of the security guarantee in this scenario be a negative one for Taiwan?
krior
*the US WAS the only credible seller
Tadpole9181
Like with Ukraine? Like with Iran? The US has proven its word is literally worthless and beholden to the whims of a dictator.
At this point, Taiwan would be foolish to not start working on a secret nuclear bomb program. North Korea has proven its the only way to actually protect yourself.
throw9394944
Until you change president... Iran made several security deals with US...
_hyn3
What would TSMC do if they couldn't sell chips to the USA? It cuts both ways, like most trade negotiations.
MBCook
Is “don’t buy stuff with TSMC chips” really a valid option we have?
Isn’t that basically “stop buying high technology” to a large degree?
1over137
Sell to the other 95% of humanity I guess.
xyst
> ... American consumers will end up paying the tariffs
This has always been the case. I have never heard of a company absorbing tariffs on behalf of consumers in the day and age of "trickle down economics".
duxup
So far indications are many companies are eating the tariffs, for now.
Even making them visible has drawn the ire of Trump a few times already.
But I generally agree that it can't go on forever / not how it works historically.
null
cnst
I'm actually surprised that some prices are even lower now than they've previously been.
I don't think most people actually have a solid understanding of what is and is not affected by which tariffs.
If I understand correctly, most of the tech stuff is effectively exempt; and Canada/Mexico tariffs don't apply to most items that are covered under "the rules of origin" certifications under USMCA (the successor to NAFTA).
I think the biggest hit has been the elimination of the de minimis rule, which now makes it difficult and/or impossible to get anything directly from China by USPS, be that cheap clothing or small electronics.
asadotzler
Eating the tariffs by firing workers means more out of work with less purchasing power and prices are going up too. It's fail all the way down.
snarf21
A lot of them are "eating" them in the margins of the unreasonable "inflation" increases they used to see how much the public was willing to pay for their products. (Normally, this would be okay in a functioning capitalist market except we've let way to many companies gain a monopolistic position with no real market competition to force a reasonable middle ground between profit and elastic demand.)
YetAnotherNick
> Not buy TSMC made chips? Obviously that is impossible
Why do you think that? Trump clearly wants them to use Intel's 18A which is likely similar to TSMC 2 year old N3P, which is not an impossible option.
cherryteastain
The same 18A that their CEO is axing?
https://www.reuters.com/business/retail-consumer/intels-new-...
bigbadfeline
That's 14A, not 18A, and it's not being axed, but questioned in what appears to be a game of chicken.
tester756
18A is not getting axed, they'll use it.
fh973
Them? Nvidia and AMD? RTX 7xxx would then be based on an old Intel process? Would buy these?
MBCook
All of Apple’s stuff?
even if Intel’s processes worked just as well, there’s no way they have the capacity to take over for all that stuff.
We’d be back in a huge shortage.
YetAnotherNick
I would buy that if I could get it in 30% lower price.
cyphertruck
This is like an old fashioned Civilization game trade. Taiwan gets a significant ownership in a blue chip US company, TSMC should then take %51 control over intel, and turn it around. The US gets a stronger position with China such that china attacking Taiwan would be like bombing Apple or Google. The USA will go to war over that.
Only the willingness to go to war, stops aggressors. War is terrible and economic competition is the path to peace, but if you can't defend yourself you will get destroyed.
phkahler
On the surface, buying 49 percent of Intel wouldn't infuse the company with any capital. It would just bail out investors.
fuzzylightbulb
"Heads I win, tails you lose" combined with "I'm altering the deal. Pray I don't alter it any further." This is what passes for American diplomacy these days apparently.
null
cyphertruck
It actually wouldn't. The sale price will be pretty close to the current market price, maybe %10 more. If the Government kicks in funds to underwrite the deal (say a loan to TSMC) then the deal would likely happen exactly at market price.
That means investors who sell are getting the current low market price or a little bit higher--- they will still be down the massive amount.
This is really bailing out current management-- letting them be replaced by the more capable TSMC people and getting an attaboy for helping the US government strengthen the alliance with Taiwan, keeping peace in the region.
Herring
> It may be dangerous to be America's enemy, but to be America's friend is fatal.
ldoughty
I'm kinda of shocked that chip & many tech companies play ball..
They are a required / no alternatives industry by so much of the USA, with limited alternatives. Is it really more cost-effective for each of these companies to spend hundreds of billions of dollars to avoid tariffs when they could easily pass on these costs because we have no alternatives?
CGMthrowaway
>I'm kinda of shocked that chip & many tech companies play ball..
Have you heard of this story? https://www.eff.org/deeplinks/2007/10/qwest-ceo-nsa-punished...
The only telecom in America to resist turning on a domestic eavesdropping firehose tap for the government, was pounded to the edge of bankruptcy.
Intel and TSMC are both strategically important and favored-status corporations for the going concern of the United States, and large swaths of the federal appartatus are invested in their success, contracts, global projection, etc. That comes with a price. Naive to think they are independently operated companies.
meragrin_
> The only telecom in America to resist turning on a domestic eavesdropping firehose tap for the government, was pounded to the edge of bankruptcy.
How so? There was no mention of the government taking action against the company to cause the company to fail. If a company is failing without government contracts, that is on them and not the government.
sleepyguy
Bernie died in prison because he didn't want to give them access to Worldcom so the story goes.
seanmcdirmid
Bernie was released a month before dying. Don't ask me how I had this fact in the back of my head (I looked at Worldcom and Enron a few weeks ago for another HN story).
duxup
I think people in power are pretty fond of non democratic systems, they like them. They make friends and get favors. Far easier than competing.
And what's the alternative for many of them? Lawsuits?
SCOTUS has quit doing their job. The checks and balances are out the window. There is no leadership / anyone in power at the national level when it comes to democracy in the US at this time.
assword
> they could easily pass on these costs because we have no alternatives
Now imagine the same scenario, but one side is willing to destroy themselves as collateral if they don’t get the result they want.
tick_tock_tick
> when they could easily pass on these costs because we have no alternatives
The administration has made it clear they will take such actions personally.
The USA by and large figuratively controls the world. All of Europe is one step away from a protectorate and if Taiwan doesn't want to conquered by China they need the USA in the way.
If the USA ever sours on the relationship it means China will take Taiwan so they do whatever they need to do to appease the USA.
platevoltage
After pretty much every company with a public profile threw money at Trump's inauguration fund, this doesn't surprise me at all.
duped
Because they know that Trump is full of shit and a personal bribe in millions of dollars with some public copy of a public bribe of billions (that will never happen) will get him off your back.
dismalaf
Honestly, this is a win-win for TSMC.
Intel isn't dead. They've made some bad choices and investments but they're still huge. They have $30 billion in gross profit per year on an utterly boring, non-hype based business model. Get rid of some dead weight, write off the bad investments, improve their foundry business and their value easily grows multiples of what it currently is.
On top of it already being a shrewd business deal, doing a favour for the US government also potentially buys protection for TSMC and Taiwan from China. Plus the immediate tariff relief.
Fade_Dance
Intel is not profitable. They have negative eps and negative free cash flow. The cash flows from existing products can't be considered in isolation. If their R+D and Capex investments stopped, the sum total of the existing+legacy cash flows wouldn't nearly cover Intel's substantial liabilities.
They also have 50 billion dollars in debt, and their cash flow situation has gotten so desperate that slices of future fab revenue have been pawned off to private equity, who now has a senior claim on the assets (as do the bondholders).
An equity stake and Intel is not something that a TSMC would want without coercion. It's just not a very attractive place to be an equity holder.
>Get rid of some dead weight, write off the bad investments, improve their foundry business and their value easily grows multiples of what it currently is.
As if it was that easy. The company has now been through multiple CEOs attempting to mix up these ideas in various ways. The last CEO tried to do a Hail Mary to improve the foundry business, but the balance sheet can't support it. Now the new CEO is essentially writing off those investments and putting them on the back burner. Considering that, getting rid of the dead weight will be difficult, considering the company itself is largely dead weight... The quality of their employees is not good, or at least not nearly at the level that needs to be (18A yields are alarmingly low, and that's the critical product that basically determines the company's future. 14a is already looking more and more distant despite it being the purported savior not even a year ago).
Realistically, their financial situation puts them right at the precipice of needing to shed the fabs, and/or permanently continue down the path of more Brookstone-like partnerships where they can spread the burden (which then caps the equity holder upside).
There is nothing "easy" about the current situation. Maybe without the 50 billion in debt, but nearly all of remedial paths are running into nasty balance sheet constraints. There's no more room to spend quarters rejiggering the thing.
dismalaf
> Intel is not profitable.
Did I say they were? Google gross versus net margin.
> If their R+D and Capex investments stopped, the sum total of the existing+legacy cash flows wouldn't nearly cover Intel's substantial liabilities.
You sure? https://www.intc.com/financial-info/balance-sheet
Current assets are $43 billion. Total assets are $192 billion. $30 billion yearly in gross profit. Debt is only $50 billion. They still hold 75% market share. Repeat, they still sell 3 times more chips than AMD.
Yes, their balance sheet isn't as good as some fabless competitors but if TSMC helps them with their 14a yield then it looks like a good investment.
Also, having TSMC on board will surely help with their fab business. Again, between the US government needing them to survive, TSMC on board, plus the fact they still do have a decent core business, I think Intel (and TSMC's investment) will be fine.
phkahler
>> doing a favour for the US government also potentially buys protection for TSMC and Taiwan from China. Plus the immediate tariff relief.
They already built fabs in the US. The thing about protection money is the bully keeps asking for it again and again.
ldoughty
But the US government has proven to be unreliable in maintaining commitments -- even words on paper are meaningless as it doesn't seem to stop them from changing the deal later and demanding more ("I have change the terms of our agreement, pray I do not alter them further"), and then another request demanding more. Would TSMC be doing the government a favor and gaining protection, or are they being extorted? ("would sure be a shame if we doubled your tariffs again...")
throwup238
Does it really matter? Does TSMC have a choice either way?
They’re a globally important company but they’re not ASML and they’re stuck between two superpowers and the threat of potential total war. They’ve had the misfortune of being sucked into geopolitical maelstrom and those tides are far too strong for any company to resist.
Matticus_Rex
If it were a win-win relative to their other options, they wouldn't have to be forced into it. They may have been able to make the best of it, but let's not pretend value is being created.
btian
I don't know if any of that is true. Even if it's true, why TSMC?
Will Apple, AMD, and nVidia continue to trust TSMC if it owns half of Intel?
dismalaf
> Will Apple, AMD, and nVidia continue to trust TSMC if it owns half of Intel?
It doesn't matter because none of them have much choice. None of them own fabs and Samsung's capacity is significantly less than TSMC's. Plus Samsung also designs chips.
brokencode
Fortunately for TSMC, Intel really isn’t worth that much anymore. $50B doesn’t seem so bad, and maybe it could lead to a deep partnership and sharing of tech and factories.
molticrystal
I understand the push to build fabs in the US to avoid tariffs, as the US likely sees this as a strategic hedge for the global chip supply in case China disrupts Taiwan or Japan, or some other rare catastrophic event occurs.
Whether it is correct or not, Trump seems to view the US as a larger version of Mar-a-Lago, so he'll always feel he can charge a premium for access to its consumer base and market while offering discounts to those he sees as ingratiating themselves.
But it is supposed to be a free market that should reward efficiency and competence, not prop up companies that don't have their act together. If the goal is domestic chip production, funneling funds to TSMC's proven fab operations and to build more US fabs makes more sense than bailing out Intel, regardless of whether it is improper to demand such concessions at all.
charlieyu1
TSMC tried to build fabs in US, it doesn’t work, turns out you can’t hire top PhDs and pay them 30k and tell them it’s a lot of money
jpalawaga
doesn't tsmc have a 4nm plant in arizona that is cranking out chips today?
Havoc
Someone with a gun to their head is the only party that would buy it.
Latest mindfactory data suggests that in gaming consumer space is now 96% AMD, 4% Intel. Seriously:
https://www.reddit.com/r/pcmasterrace/comments/1mfu3cq/this_...
And doesn't sound like their next or next next nodes are in good shape either
tester756
>Latest mindfactory data suggests that in gaming consumer space is now 96% AMD, 4% Intel. Seriously:
That makes you think that this data is representative?
IshKebab
That's not how it works. The fact that Intel are doing abysmally is already priced in.
hunglee2
Unprecedented rapacity by the United States - not only forced tech transfer, and then having to pay for the privilege of being robbed; the hegemon is consuming its vassals, as it withdraws from its commitments.
phkahler
Well China has been forcing tech transfer for 30 years now.
Herring
Look at Intel's history. Concentration of power (monopoly) generally leads to corruption/abuse and stifled innovation. It's bad even for the monopolist.
The second China becomes powerful enough to throw their military around like the US is when I start supporting tech transfers the other way. A more distributed power structure is much better for overall progress.
threatofrain
> The second China becomes powerful enough to throw their military around like the US
This would be late timing.
howmayiannoyyou
[flagged]
melling
Intel only up 4%. Seems unlikely.
null
I don't get it. Isn't it like forcing the foreign competitor into buying your only chicken that produces golden eggs. I really don't understand the logic behind this.