Trump would not support foreign firm operating Intel's US factories -White House official

By Arsheeya Bajwa

(Reuters) -President Donald Trump's administration likely would not support Intel's U.S. chip factories being operated by a foreign entity, a White House official told Reuters.

The comments came after Bloomberg reported that Taiwan's TSMC, the world's biggest chipmaker, is considering taking a controlling stake in Intel's factories at Trump's request.

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.

Earlier, Bloomberg had reported that Trump's team raised the idea of a deal between the two firms in recent meetings with officials from TSMC, and they were receptive, citing a person familiar with the matter.

The talks are in very early stages, and the exact structure of a potential partnership has not been established. But the expected result would have TSMC fully operating Intel's U.S. semiconductor factories, Bloomberg reported.

Such a deal could throw a financial lifeline to Intel, which has struggled to restore its lost chipmaking glory as it failed to capitalize on an AI boom and poured billions of dollars into becoming a contract chip manufacturer - a transformation that is yet to materialize.

Intel shares closed down 2.2% on Friday, while TSMC's U.S.-listed shares closed up about 1%.

"Combining TSMC's expertise and engineers with Intel's infrastructure could help kick-start President Trump's dream of having the U.S. become the center of the chip universe," said Brian Jacobsen, chief economist at Annex Wealth Management.

But such a deal would need deep concessions on both sides.

Should TSMC accept an arrangement to run Intel's factories, it would have to make significant changes to the U.S. chipmaker's operations because each chip manufacturer has distinct methods and techniques for operating factories.

To operate Intel's fabs, TSMC would also likely need to reveal some of its secret techniques and processes to Intel employees.

On its part, Intel would have to concede the fact that its manufacturing operations would become a totally different entity, likely with a completely different work culture.

As well, TSMC fully operating Intel's factories, known as fabs, also raises questions about Intel's key strategy of manufacturing the chips it has designed. Most chipmakers are "fabless" - outsourcing to the likes of TSMC, which offers considerable cost savings.

"If Intel moves down this path, you focus on being a semiconductor design company. So you end up looking more like a Broadcom or a Marvell or an AMD," Wedbush Securities analyst Matthew Bryson said.