South Korea’s semiconductor industry is closely watching developments in talks between TSMC Co. and Intel Corp. over the world’s largest contract chipmaker’s possible acquisition of Intel’s foundry business — a move that could set back Samsung Electronics Co.’s battle to narrow the gap with TSMC.
According to reports from The Wall Street Journal and other foreign media outlets, the Trump administration has proposed TSMC take over Intel’s struggling foundry business. Intel entered the foundry sector in 2021. It reported a net loss of $19.2 billion last year.
Their talks are in their early stages, the Wall Street Journal reported on Feb. 15, citing people familiar with the discussions. Separately, Broadcom has been closely examining Intel’s chip-design and marketing business, which would break up the iconic US chipmaker into two.
Industry observers speculate TSMC may acquire Intel’s foundry operations, establish a joint venture, or form a technology-sharing agreement with the US chipmaker.
Analysts in South Korea see a low likelihood of the Taiwanese contract chipmaker fully taking over Intel’s foundry unit, citing anti-trust concerns. They believe the talks would result in TSMC buying Intel’s US factories.
According to Taiwan Economic Daily, the most likely scenario would be TSMC acquiring a 20% stake in Intel’s foundry business.
“Whatever form the deal takes, it will have a negative impact on Samsung’s foundry business,” said a semiconductor industry analyst.
Samsung’s foundry unit has been incurring sizable losses for years.
SAMSUNG’S FOUNDRY ‘RELIEF PITCHER’
The report came as the world’s No. 1 memory chipmaker is gearing up for a leap in the foundry market. In November, Han Jin-man, executive vice president of its US semiconductor business, was named to lead its foundry unit as a “relief pitcher.”
In his inaugural message to Samsung employees, he stressed the importance of a “rapid ramp-up” of foundry production using the 2-nm process.
Kim Hyung-jun Kim, head of South Korea’s Next-Generation Intelligent Semiconductor Foundation Group and an honorary professor at Seoul National University, said that TSMC could utilize Intel’s factories in the US, instead of expanding its facilities in Arizona.
“This would effectively boost TSMC’s production capacity, further eroding Samsung’s already limited market share,” he warned.
Intel produces its central processing units and other semiconductor products worth approximately $20 billion annually at its in-house foundry unit. If TSMC takes over Intel’s foundry unit, their combined market share would surge to nearly 75%.
As of the third quarter of last year, TSMC commands 64.9% of the global foundry market, trailed by Samsung with a 9.3% market share.
LIMITED IN SCOPE
There are some hurdles to TSMC’s possible acquisition of Intel’s foundry arm, however.
Any deal between TSMC and Intel would require approval from anti-trust bodies from their major export markets as it could further consolidates the foundry sector under a single dominant player.
Given these constraints, industry experts predict that TSMC would end up acquiring Intel‘s factories rather than a full takeover.
“Any collaboration between TSMC and Intel is likely to remain limited in scope,” said Kim Yang-paeng, a senior researcher at the Korea Institute for Industrial Economics and Trade.
By Ui-Myung Park and Chae-Yeon Kim
Uimyung@hankyung.com
Yeonhee Kim edited this article.
