TSMC Faces Major Obstacles in Intel Collaboration Amid U.S. Pressure and Shareholder Opposition

Foreign stakeholders express concerns over risks of investment in Intel

Despite significant pressure from the Trump administration, Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor foundry, faces considerable challenges in forming a collaboration with American semiconductor giant Intel. The push for this partnership stems from strategic national interests, but the road is complicated by resistance from TSMC's majority foreign shareholders, who express concerns about the financial implications of such an investment.

Experts have highlighted that the primary issue lies in TSMC’s shareholder structure, where foreign investors control more than 70% of the company. These stakeholders, many of whom are deeply concerned about Intel's ongoing struggles, are cautious about the potential financial losses associated with the partnership. Given Intel's recent performance issues, these investors fear that a significant investment could harm TSMC's financial health, leading to opposition against the collaboration. As a result, even though TSMC's chairman, C.C. Wei, has explored options for working with Intel under the increasing U.S. pressure, the decision would require approval from shareholders, which is unlikely to pass given their concerns.

Another complication arises from political and strategic considerations. The Trump administration's aggressive “Made in America” policy has focused on encouraging U.S. companies, including Intel, to secure semiconductor production within the country, pushing for a partnership with TSMC. This pressure to collaborate has created a delicate situation for TSMC, which could be seen as bowing to foreign government influence. TSMC’s relationship with the U.S. government is complex, as it must navigate both strategic interests and the priorities of its shareholders, many of whom are concerned about the implications of such a major collaboration.

In terms of shareholder dynamics, experts predict that TSMC may lean toward alternative methods of collaboration, such as technology sharing or joint research initiatives, rather than a financial investment in Intel. These approaches would allow TSMC to meet U.S. demands without the risk of directly injecting capital into a struggling company. This method would also help avoid the complexities of shareholder approval and mitigate financial risks while still advancing semiconductor technological development in alignment with the U.S. administration’s priorities.

Currently, TSMC’s shareholder structure is primarily composed of foreign institutions, with government agencies holding just 6.68%, financial institutions owning 4.61%, and foreign entities representing 72.06% of the shares. This high percentage of foreign ownership significantly influences the decision-making process within TSMC, as these stakeholders' interests often diverge from local political considerations.

Furthermore, some local experts, such as former Taiwan Executive Yuan Vice Premier, Su Tseng-chang, have strongly opposed any move to collaborate with Intel through investments or acquisitions. They argue that such a move would not only jeopardize TSMC’s financial position but also weaken Taiwan’s national security. Taiwan’s semiconductor industry plays a crucial role in what is known as the “Silicon Shield,” a strategic defense concept that leverages Taiwan’s semiconductor prowess to deter military aggression by its larger neighbors, particularly China. Any collaboration that could undermine Taiwan’s semiconductor dominance or expose it to foreign influence could have serious geopolitical consequences.

While the Trump administration continues to press TSMC for cooperation with Intel, it remains clear that the semiconductor giant faces significant resistance both from its foreign shareholders and local political figures. As the situation evolves, the possibility of a different form of partnership, such as a technical alliance rather than a financial one, seems to be the most likely outcome for TSMC and Intel. However, these complexities show how global geopolitics, shareholder interests, and corporate strategy are intertwined in the world of high-tech investments.