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Earlier this month, a fallen tech stock started to rise on an unexpected catalyst.
Intel, (INTC) had been cast aside by many experts who see it as a relic of a former era, a company that proved unable to innovate at a pivotal time and that joined the artificial intelligence (AI) race too late. But two stronger companies have recently expressed interest in acquiring parts of Intel’s business.
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The prospect of offers from both Broadcom (AVGO) and Taiwan Semiconductor Manufacturing Company (TSM) could certainly help Intel, which has struggled significantly over the past year, with shares declining more than 40%. However, that doesn’t necessarily mean it is best for the United States, specifically for its AI industry.
Multiple experts recently speculated that Taiwan Semiconductor taking over Intel’s plants could prove highly problematic. However, they see a way for the struggling company to move forward.
Taiwan Semiconductor may not be the savior that Intel needs
Both TSM and Broadcom have contributed to Intel’s decline over the past few years, undermining its former strength both in integrated design and chip manufacturing. As Intel struggled to innovate in a rapidly changing market, other companies moved faster and procured bigger pieces of both markets, leaving the former leader in a precarious position.
Related: Two major tech leaders consider shaking things up at Intel
With Broadcom considering purchasing Intel’s chip design business and Taiwan Semiconductor looking to purchase its factory facilities, the company found itself in the national spotlight. This has continued since then, partially due to reports that the Taiwanese chipmaker’s interest is due to pressure from President Donald Trump.
In an article recently published by Fortune, professors David B. Yoffie and James Plummer, nonprofit leader Reed Hundt and former U.S. trade representative Charlene Barshefsky examined this development, noting that “Intel’s technology is at least a generation behind TSMC” and therefore, it may not make sense for the company to make a deal.
“Why would TSMC buy this network—this long, heavy ball and chain?” The authors ask. “Presumably only if the United States government pressured it to do so, perhaps holding Taiwan hostage to America’s defense capabilities.”
They add that this might not benefit the U.S. as Trump likely envisions, speculating that even in the event of a deal being reached between the two companies, Taiwan Semiconductor would likely keep its leading-edge research and manufacturing would remain in its base country.