Daily: TSMC & Intel; Broadcom & Intel; Hua Hong profits plummet
5.5 min read.
Highlights
More on TSMC and Intel. More sources in more outlets reporting on the potential TSMC/Intel partnership, which was previously just rumour when I discussed lightly here and here. It seems that Intel Foundry would split off and then be taken over by TSMC (supported by other investors). Commerce Secretary nominee Howard Lutnick is involved in conversations, as are the chairmen for Intel and TSMC, and they all seem pretty serious. However, Reuters reported an anonymous White House official, who reportedly said that Trump may not support the sale of Intel fabs to a foreign business.
I guess it is still early days, so the details of a potential deal haven’t been ironed out yet. There could be, say, a US-based TSMC-Intel JV, a bit like TSMC’s Japanese subsidiary JASM.
It’s also unclear what the Trump administration stance is, especially given their chaotic, fast-changing nature. At a minimum, there will likely be antitrust legal concerns, given TSMC’s market share over advanced chip manufacturing is already near-monopolistic. TSMC’s only competitors right now are Samsung and Intel, so an Intel acquisition would bring the competitors down to one.
I imagine this will be a developing story with real potential for some concrete developments in the coming months. Stay tuned.
Intel and Broadcom. Separately, Broadcom looks to acquire Intel’s design business. This seems even less developed than the Intel/TSMC story. A few other names have looked into acquiring Intel in the past half a year or so, including Qualcomm, so am unsure how seriously to take this news. My sense is that more likely than not, Intel’s design business will remain Intel, especially if their fab business gets spun off.
Hua Hong profits plummet. Chinese foundry Hua Hong Semiconductor’s net profits drop by 79% year-on-year, as prices drop and depreciation costs rise. They’re China’s second largest foundry, after SMIC, and does mostly legacy chips >22/28nm.
Thanks for reading.
1. Policy and Geopolitics
1.1
NYT (02/14): With Trump’s Help, Intel Could Hand Control of Chip Plants to TSMC
Over the past few months, Frank Yeary, the interim executive chairman of Intel, has spoken with administration officials and leaders of Taiwan Semiconductor Manufacturing Company about a deal that would separate Intel’s ailing manufacturing business from its semiconductor design and product business, according to four people with knowledge of the plan, who spoke on the condition of anonymity.
TSMC, which produces an estimated 90 percent of the world’s most advanced semiconductors, would assume control of Intel’s manufacturing business and take a majority stake in the business alongside a consortium of investors that could include private equity firms and other tech companies, the four people said.
The Trump administration has encouraged TSMC to do the deal. Howard Lutnick, President Trump’s nominee for commerce secretary, has been involved in the conversations and considers them one of the most consequential challenges of his new job, two of the people familiar with the discussions said.
1.2
Reuters (02/15): Trump may not support foreign firm operating Intel's US factories -White House official says
President Donald Trump's administration may not support Intel's, U.S. chip factories being operated by a foreign entity, a White House official told Reuters.
The White House official said the Trump administration supports foreign companies investing and building in the U.S. but is "unlikely" to support a foreign firm operating Intel's factories.
1.3
FT (02/14): Taiwan pledges to boost US investment after Donald Trump’s tariff threat
Taiwan’s president has pledged to boost procurement and investment in the US as he rushes to respond to Donald Trump’s global tariff threats and pressure on Taiwan’s semiconductor industry.
The US trade deficit with Taiwan, its seventh-largest trading partner, widened by $26.1bn to $73.9bn last year, driven by booming demand for cutting-edge artificial intelligence chips. Most are made by Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker.
1.4
TrendForce (02/17): SK hynix Reportedly Weighs Suspension of Chinese EDA Software Amid Expected U.S. Restrictions
SK hynix has initiated an urgent review of Chinese semiconductor Electronic Design Automation (EDA) software anticipating that the U.S. may impose restrictions on South Korean semiconductor firms using Chinese software.
One of the main reasons behind SK Hynix’s move, as highlighted by the report, is the U.S. government’s recent decision to designate Empyrean Korea, the South Korean branch of Chinese EDA firm Empyrean, as a restricted entity for trade.
Meanwhile, Samsung Electronics, which has been utilizing Chinese EDA solutions from Empyrean, Primarius, and Entasys since 2022, is also expected to take a similar course of action.
1.5
Nikkei (02/15): Japan eyes takeover of critical factories during emergencies
The Japanese government decided on Friday to revise legal guidelines for promoting economic security, paving a way for it to temporarily take over factories that manufacture critical goods like semiconductors in the event of an emergency.
Aims include being able to quickly increase production of medical supplies such as masks during an infectious disease outbreak and preventing important production technologies from leaking to other countries.
2. Economy, Finance, and Business
2.1
WSJ (02/15): Broadcom, TSMC Weigh Possible Intel Deals That Would Split Storied Chip Maker
Broadcom has been closely examining Intel’s chip-design and marketing business, according to people familiar with the matter. It has informally discussed with its advisers making a bid but would likely only do so if it finds a partner for Intel’s manufacturing business, the people said.
2.2
WSJ (02/16): The Rower Turned Engineer Who Helped Make Nvidia a $3 Trillion Company
Nvidia had a problem. U.S. officials in 2022 began restricting what the chip company could sell to China, which then accounted for a fifth of its sales.
To keep up its business there, Chief Executive Jensen Huang turned to a lieutenant, Jonah Alben.
Alben told his boss there was no time to design a completely new chip for China. Instead, his answer was to take Nvidia’s top product at the time and reduce its performance to meet the U.S. rules—including by physically burning parts of the chip. Two months later, Nvidia began marketing the modified chip to Chinese customers.
The job puts Alben at the center of the U.S.-China technology Cold War—with Chinese startups such as DeepSeek challenging industry leaders in the U.S. by using Nvidia’s made-for-China chips.
2.3
TrendForce (02/17): Global Semiconductor Equipment Market Continues to Expand
Recently, Tokyo Electron announced plans to build a new production facility in Miyagi Prefecture, Japan. The facility will be managed by TEL’s manufacturing subsidiary, TEL Miyagi, and will primarily produce semiconductor manufacturing equipment such as plasma etching systems to meet the rapidly growing demand for semiconductors in recent years.
According to TEL, the estimated construction cost of the new facility is approximately 104 billion yen. Construction is expected to begin in June 2025 and be completed by the summer of 2027. TEL aims to make this facility one of the world’s leading semiconductor equipment factories.
SEMI previously predicted that global semiconductor equipment sales would reach $113 billion in 2024, representing a 6.5% year-on-year increase. The Chinese market is expected to achieve record-high sales of $49 billion. Additionally, SEMI forecasts that global semiconductor equipment sales will further rise to $121 billion in 2025 and $139 billion in 2026.
2.4
Nikkei (02/15): China foundry Hua Hong reports 79% drop in net profit on lower chip prices
Major Chinese foundry Hua Hong Semiconductor logged a $58 million net profit for 2024, a 79% plunge from a year earlier, weighed down by weaker prices as well as higher depreciation costs.
Revenue declined 12% to $2 billion, the Shanghai-based company reported Thursday.
2.5
Nikkei (02/14): Nvidia cuts stake in Arm Holdings, invests in China's WeRide
Nvidia reduced its stake in British chip firm Arm Holdings by about 44% and exited its holdings in Serve Robotics and SoundHound AI in the fourth quarter, a regulatory filing showed on Friday.
The artificial intelligence chip giant also reported a position of 1.7 million shares in China's self-driving startup WeRide, sending its shares up 76%.