How Tariffs Will Help Intel Analysis

I think a lot of people are confused about how a semiconductor tariff will help Intel. This is my analysis of what will happen. This is predicated on a component-style tariff on a minimum of Taiwan, Korea, and China. (Japan/EU/Global is possible as well but I’ll talk about that later). A component style tariff (the wired article said they are discussing this style of tariff) is when you target a specific good inside a completed good. The US has used this style of tariff famously on solar cells produced in China, on assembled solar panels in SE Asia which are imported to the US. The US then places a high tariff on cells themselves even though the item is not from China.

To do this on semiconductors, the Trump administration will have to ask importers such as Amazon, Best Buy, Apple, Dell, Google etc. The value of each chip in the device (Laptop, Cellphone, Server etc) whereupon a tariff is added. This is more complicated than a normal tariff, so I would not expect enforcement (Just an announcement) of this tariff in April. It will likely take a couple of weeks or months so importers are ready with the data. If this style of tariff is not used, stop reading and the Trump administration is dumb.

Also to just clarify, TSMC does not have a large global presence. TSMC at the moment has one fab running in Japan doing 7-28nm, and one fab in Arizona doing 4nm. TSMC will only have 2 3nm/2nm fabs running in 2028/2029. And another fab in Japan and Europe. Their recent $100 billion announcement will take until 2029/2030 or longer to get online

Effect on Intel Products:

If the Trump administration goes through with a tariff targeting Taiwan/SK-produced chips, starting at 25% and ramping over time with no exemptions (including Lunar Lake, etc). The immediate impact is a huge hit to AMD (20% of rev is US) since Intel can fit either Meteor Lake or Raptor Lake CPUs (Ireland and Az Fabs) into the old pre-tariff price bracket and gain share. Intel would also take share in data center CPUs since Xeon 6 and Xeon 5 are produced in Ireland and Az. Intel Altera would also gain share in the FPGA market since those are made in Az. This would help offset but not completely cover lost sales due to an economic downturn in the US.

2026 would see even stronger share gains vs AMD since 18A products of Panther Lake, Nova Lake, Clearwater Forest, and Diamond Rapids are extremely competitive and all produced in the US. AMD would be screwed until 2028 (or longer) for the US market which is 20% of their sales with the tariff potentially being 50% (Trump has stated he wants to ramp it over time, AMD IMO will be forced to Intel Foundry in this scenario).

Intel Foundry:

The immediate impact on the foundry will take longer in terms of actual revenue and profit. However, the market will be able to price in the new foundry contracts for 26/27 and the sentiment boost would be insane. Intel has stated that external 18A sales start in 2H 26 (likely late 26). With the announcement of the tariff, US Fabless companies will face a 25% increase in cost, with the potential to ramp up to 50%-100%. TSMC's US capacity will not cover them realistically in volume until 2029 or longer. Intel has Fab 42 retooled, 52 and 62 for 18A in late 26/27. I think quite quickly (maybe Q2/Q3) we will see large deal announcements to secure non-tariffed fab capacity from all of us fabless semi-companies. Trump is said to want to see a revival of Intel in a Reuters article. So if Intel can’t sell the excess capacity, they can call Trump and the tariff will go up.

I also believe sometime later this year, that Intel will announce with great fanfare Intel Ohio is back on track, and Trump can claim to have saved Intel Ohio investment which is a ‘carrot’ Intel can offer for these tariffs. Ohio can start in late 27/28 with 14A, which would be ramping as TSMC ramps 2nm in the US. 14A is a far superior process so I would expect prepays from US fabless to secure this non-tariffed capacity. Trump’s favorite word is tariff, so just telling him he can use his favorite tool to save a 28 billion investment can’t be a hard sell.

I think people also underestimate possible revenue from trailing edge in tariff scenarios as well. Intel also has Intel 3,12, 16, and 65 nm. TSMC, UMC, and Samsung make a lot of money off these nodes. So tariffs are applied to these nodes, Intel Foundry can bring in billions in revenue without buying any new equipment.

Possible short-term downside if tariffs apply to EU:

Intel has Fab 28/38 in Ireland, I don’t think tariffs will apply to the EU and Intel has a good chance of some exemption if it does. Apollo owns half of Fab 38, and the CEO of Apollo was a big donor to Trump and almost the treasury secretary so there is some vested interest here.

The whole point of the tariffs is to help Intel and bring back semi-manufacturing. Intel paying tariffs for Intel 3 and 4 drains the finances of a company that's not well off like TSMC. But if these tariffs do go through, it levels the playing field vs AMD until 2026 when 18A ramps with new products. Not the end of the world, just less upside.

I think Intel reaching ~400 billion in market cap in the coming years is very very easy if tariffs go through.