Fierce Electronics is tracking what’s happening lately to Intel and, more broadly, CHIPS Act funds, among other topics. That includes the state of tariffs that have sent markets reeling.
Here are some updates on Intel fabs and the fate of unspent billions in CHIPS Act funds. Warning: nothing seems solid.
Picking what’s a solid rumor (that’s whacked English usage!) is a little like wondering aloud whether there will be reciprocal tariffs on all booze or just some Champagne from France or other alcohol and liquor from the EU as well as steel and aluminum and cars from Canada. In other words, a mixed bag of many commodities are being set up for tariffs by various countries, friends and foes alike-- all initiated by one Donald Trump. Yes, a trade war.
Tariffs are definitely happening on most commodities--until they are reversed or delayed-- and much of what is included depends, apparently, on what is on the mind of President Trump. “The president has created an atmosphere of negativity and fear everywhere,” said CNBC’s Jim Cramer on Thursday, speaking almost in an undertone. “I’m not going to bend at all” on tariffs, the president said Thursday.
What’s happening with TSMC and Intel?
TSMC is talking to US chip design companies-- including Nvidia, AMD, Broadcom and Qualcomm-- about creating a joint venture to operate Intel fabs, according to three industry sources who have spoken to Fierce Electronics.
The fact that the talks were underway was mentioned to Fierce by three analysts two weeks ago in late February, but Reuters found four unnamed sources on March 12 who were willing to offer a few more specifics. Reuters confirmed what FE had reported, that President Trump was urging TSMC to turn around Intel’s fortunes. And, some analysts had reported in February that TSMC would take no more than a 50% stake in the Intel fabs, also confirmed by Reuters, with the added note that TSMC would operate the foundry.
What Fierce had earlier learned is that Trump and Commerce Secretary Howard Lutnick are suggesting the US chip designers become Intel fab customers. The idea of their becoming members of a joint venture led by TSMC (as reported by Reuters) is more solid than what Fierce was told earlier.
Patrick Moorhead, analyst at Moor Insights & Strategy, had told Fierce (and probably other news outlets) on Feb. 13 that Trump was pushing chip designers to use Intel Foundry services. That information was included in a Fierce story.
Now we have the Reuters sources saying there’s talk of a joint venture controlling half of Intel foundry services.
RELATED: Really, did Intel just reach Golden Boy status?
The likelihood of this joint venture happening is, say, a 7 out of 10. But it could be just a 5. The way the market reacted to that Reuters report on March 12, with a big bump in Intel shares, makes it seem investors are hearing more about a joint venture from sources they trust.Intel shares jumped late Wednesday March 12 partly on the pick of Lip-Bu Tan as Intel CEO, but the joint venture report might have been more responsible for the share jump that day and Thursday. As of Friday, shares were up again and had soared nearly 17% over the prior five days.
RELATED: Intel appoints Tan as CEO, restores him to board; stock up 15%
Whither those billions in CHIPS Act funds?
On the matter of the CHIPS Act funds, it seems likely there could be as much as $35 billion unspent in grants to chip fabs in the US. Remember, CHIPS for America under NIST, had already granted $36 billion out of $39 billion designated for grants, but only $4 billion in government checks had been sent to various grant recipients as of early February, according to several sources who spoke to Fierce. (The total grant was just over $52 billion, with $2 billion to Intel for a defense related project and $11 billion for chip R&D, leaving the $39 billion for grants.)
And recall, Trump wanted the Speaker of the House to use whatever funds are left, say $35 billion, to reduce federal debt. At a joint session speech, he also called the CHIPS Act a “horrible, horrible thing.”
RELATED: Trump pounces on CHIPS Act, says unspent funds should pay debt
His suggestion brought a muted response by several elected Democrats and a few industry officials and analysts who noted that the CHIPS Act was passed by a bipartisan vote before President Biden signed it into law in 2022. The bigger response by Democratic lawmakers came when DOGE was expected to cut 500 jobs from NIST, which oversees the CHIPS Act (or did). The job cuts could still be that large, but Commerce did cut 70 NIST workers on March 3.
“The firing of such a substantial portion of staff from NIST, particularly probationary staff and postdoctoral fellows hired recently to address urgent national needs, will undermine implementation of the CHIPS and Science Act and directly jeopardize our ability to compete with thee People’s Republic of China in critical industries,” wrote Reps. Raja Kroshnamoorthi, D-Ill, Haleny Stevens, D-Mich., and Zoe Lofgren, D-Calif., in a Feb. 25 letter to Commerce Secretary Lutnick.
Jack Gold, an analyst at J. Gold Associates, told Fierce Network that Congress will push back on further attempt to cancel CHIPS Act funds. He mentioned that cutting the funds would hurt states such as Ohio, New York, New Mexico and Arizona. “If NIST gets [further] decimated, then the funding goes into a black hole,” Gold added.
However, in comments to Fierce Electronics, Gold added, “There’s no real benefit for Congress to repeal the CHIPS Act…but who knows? There’s enough on Trump’s plate right now with tariffs and trade that this might just slip under the radar…”
So, how to rank the chances that all $39 billion in grants gets pushed to actual fabs and related programs? Given the Republican majorities in the US House and Senate and how solidly they have stuck with Trump initiatives (and how much Trump hates the CHIPS act), let’s say grants will only remain about the $4 billion already distributed in checks, and a bit more. For the rest of the $35 billion reaching companies, let’s say a 6 out of 10 chance of that happening, as dismal as that sounds.
Remember, President Trump wants chip fabs (along with other manufacturing) opened in the US, and he is using a tariff stick and not to a carrot (like the CHIPS Act) to get it done. TSMC will invest $100 billion (plus $65 billion previously committed) in Arizona. TSMC is doing so, Trump said, to avoid up to a 25% tariff on electronics from Taiwan.
RELATED: TSMC to build $100B in new fabs in the US
So, yes, the future of Intel fabs and CHIPS Act funds might (indirectly) all come back to tariffs. With Trump, it feels like most things in economics come back to tariffs, used as a cudgel to get things done. President Trump sees tariffs as good, at least for the US. “Tariff is the most beautiful word in the dictionary,” President Trump has remarked.