Analysis: What a Government Backstop Would Mean for U.S. Chipmaker Intel

TaiwanPlus News

Would a U.S. government stake in chipmaker Intel mark a significant change in U.S. industrial policy? That's one of the questions on the mind of Dave Nicholson, chief advisor and senior fellow at The Futurum Group, who sat down with TaiwanPlus to discuss the future of the CHIPS Act and TSMC in light of talks on such a deal reported by Bloomberg.

Transcript

00:00U.S. chipmaker Intel hasn't confirmed the Bloomberg report that Intel is in talks with the U.S.

00:06government to take a stake in the company. But if that's true, it would be a major shift when just

00:11last week, U.S. President Donald Trump was calling for the resignation of Intel's CEO. So how big of

00:17a comeback would this deal be for that relationship? But yeah, it would be quite the turnaround if this

00:23happens. I think if you look at the broader context, though, remember the Biden administration

00:31under the CHIPS Act was essentially exerting indirect control over Intel with the strings that were

00:38attached to the money that was to be delivered. So this isn't completely unprecedented, but in the

00:45direct way that the rumors are talking about, it's very new. Even before the calls for resignation,

00:52there was some tension between Intel and the White House. Trump has floated the idea of repealing

00:57the CHIPS Act, which would send nearly eight billion U.S. dollars to Intel. If the government

01:02does take a stake in the company, do you think the likelihood that they will actually get that money

01:07goes up? I think the likelihood goes up dramatically. Yeah, yeah. I think that if the goal is to have the

01:15backstop of the federal government and the funding that was promised from the CHIPS Act and more,

01:20then this would be a very, very good deal for Intel. The question would be, would this be something

01:26where it would be temporary, much like the bailout of General Motors, versus Intel being a strategic

01:34part of our strategy for AI moving forward and a good partner to partner with from a federal

01:40government perspective? Well, there's another firm that's supposed to get CHIPS Act money, and that's

01:45Taiwan's TSMC. They're slated to get more than six billion for their Arizona facilities. Now, they

01:50say they don't need that money, but if I'm sitting at TSMC headquarters, and I've just made the largest

01:55direct investment in U.S. history, and I hear the U.S. government is taking a stake in my competitor,

02:01Intel, how am I feeling right now? You wouldn't be feeling very good. And in fact, there are a lot of

02:08American companies that were very upset by the gesture toward Intel. There's a sense that Intel

02:15made its own bed, and that it should suffer the consequences of whatever failures it might have

02:20had along the way. There's this concept of being too big to fail, too important to fail. For example,

02:28there were rivals of Intel who flatly said, Taiwan Semiconductor beat Intel at certain games.

02:35That's why we choose to use TSMC instead of Intel. Why are we now subsidizing Intel? So no, there will

02:43be a lot of people who will be upset, companies that will be upset by this. All right, Dave, big picture.

02:50What's the main question in your mind about this potential Intel deal? Is the United States pivoting

02:56more in the direction of public-private partnerships like we're used to seeing in Europe and in some

03:04Asian countries that are almost a cultural anathema in the US at this point? A lot of people would

03:14be absolutely opposed to this. The big question that's at hand here is, is AI sufficiently different

03:22to warrant this different approach? Is this just a one-off or does this signal a fundamental change

03:30change in the way government and industry will behave in the US?

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