This is not investment advice. The author holds no positions in any of the stocks mentioned.
Clarifying TSMC’s Stance on Intel Acquisition
In the backdrop of ongoing speculation about a potential collaboration between Intel and TSMC, recent statements from TSMC’s CEO, Dr. C.C. Wei, have shed light on the company’s intentions. During an earnings call for Q3 2024, Wei firmly ruled out any prospect of acquiring Intel’s manufacturing facilities. When asked again this January about TSMC’s interest in taking over Intel’s operations, Wei maintained a neutral stance, emphasizing the firm’s commitment to its existing customers without elaborating further.
Market Reactions and Intel’s Stock Performance
Despite a lack of significant operational changes, Intel’s stock has surprisingly increased by 16% year-to-date. Recent comments from Vice President JD Vance regarding America’s advances in AI chip production, along with theories surrounding the Trump administration’s push for TSMC to either collaborate with or acquire Intel’s chip factories, have contributed to this surge. Notably, Intel’s shares have climbed 22% in just five days, fueled by the excitement surrounding these developments.
Historical Insights: TSMC’s CEO on Intel Acquisition Rumors
The conversation about a potential acquisition is not new; during TSMC’s Q3 earnings call in October 2023, Morgan Stanley analyst Charlie Chan posed a similar question to Dr. Wei. His definitive response—”The answer is no. Okay, no, not at all” —signified TSMC’s position. Wei acknowledged Intel as a “very good customer, ”indicating that TSMC has been receiving substantial business from them.
Continued Speculation and Official Responses
Following the earnings call, further inquiries about any shift in TSMC’s outlook surfaced. Responding to JPMorgan’s Gokul Hariharan, Wei acknowledged the importance of Intel to TSMC but refrained from discussing any potential overrides, stating, “That’s all I can say.” This cautious approach reflects the delicate dynamics of their partnership amidst market rumors.
Geopolitical Considerations and Trade Tariffs
The geopolitical landscape is adding another layer of complexity for TSMC. Under scrutiny from the Trump administration, there have been proposals for imposing steep 100% tariffs on Taiwan’s semiconductor exports, driven by concerns over America’s waning dominance in chip manufacturing. Taiwan’s President Lai Ching-te has committed to addressing these tariffs with industry stakeholders and aims to establish a “democratic supply chain” for semiconductors, underscoring the island’s role in global technology supply chains.
The Economic Impact on Taiwan
As Taiwan’s largest company by market capitalization and revenue, TSMC serves as a vital component of the island’s economy and national security. Any tariffs on TSMC’s products could significantly impact Taiwan’s economic stability, given the company’s pivotal position in the global chip supply ecosystem, often referred to as a ‘sacred mountain’ due to its strategic importance.
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