Intel (INTC) has been in a downward spiral, with its stock plummeting 40% over the past year.
Once a titan of the semiconductor industry, the company has lost ground to rivals like Taiwan Semiconductor Manufacturing (TSM) and Advanced Micro Devices (AMD). Now, reports suggest that Broadcom (AVGO) and TSM are considering acquiring different parts of Intel’s business, raising speculation that the company could soon be broken up.
The shift in strategy comes in the wake of former CEO Pat Gelsinger’s departure, marking a potential end to Intel’s vision of being both a chip designer and a manufacturer. While the product division remains valuable, the foundry segment has been hemorrhaging money, reporting a 76% operating loss in 2024. Analysts believe that splitting the company could unlock significant shareholder value, but executing such a deal will be fraught with regulatory and operational challenges.
Broadcom and TSM’s Interest: What’s at Stake?
According to sources, Broadcom is interested in Intel’s chip design and marketing division, while TSM is considering acquiring some or all of Intel’s manufacturing plants. Broadcom CEO Hock Tan has a reputation for aggressive cost-cutting while maintaining innovation, making the product division an attractive target. Meanwhile, TSM, the world’s leading contract chip manufacturer, has the expertise to handle Intel’s foundry operations. However, repurposing Intel’s factories, which were designed for x86 CPUs, to produce a wider range of chips presents a major logistical hurdle.
Adding another layer of complexity, Intel was awarded $3 billion in CHIPS Act funding to boost U.S. semiconductor production. Any potential deal with TSM would require Intel to maintain at least 50% ownership of its foundry business, complicating negotiations. Furthermore, U.S. regulators may resist the idea of a foreign company taking over a critical piece of national semiconductor infrastructure, especially given Intel’s contracts with the Department of Defense.
According to sources, Broadcom is interested in Intel’s chip design and marketing division, while TSM is considering acquiring some or all of Intel’s manufacturing plants. Broadcom CEO Hock Tan has a reputation for aggressive cost-cutting while maintaining innovation, making the product division an attractive target. Meanwhile, TSM, the world’s leading contract chip manufacturer, has the expertise to handle Intel’s foundry operations. However, repurposing Intel’s factories, which were designed for x86 CPUs, to produce a wider range of chips presents a major logistical hurdle.
Adding another layer of complexity, Intel was awarded $3 billion in CHIPS Act funding to boost U.S. semiconductor production. Any potential deal with TSM would require Intel to maintain at least 50% ownership of its foundry business, complicating negotiations. Furthermore, U.S. regulators may resist the idea of a foreign company taking over a critical piece of national semiconductor infrastructure, especially given Intel’s contracts with the Department of Defense.
Wall Street’s Reaction and Market Implications
Investors have responded positively to the rumors, with Intel’s stock jumping 10.5% in afternoon trading. Analyst Mark Lipacis of Evercore estimates that Intel’s total worth could rise from its current market cap of $102 billion to as much as $237 billion if a breakup is executed properly. However, he cautioned that regulatory scrutiny from both the U.S. and China could slow or even derail any deal.
Bank of America’s (BAC) Vivek Arya echoed these concerns, noting that “any potential INTC split could be time-consuming and complicated.” Meanwhile, Raymond James analysts suggested that a joint venture between Intel and TSM—rather than a full takeover—might be a more politically viable option.
Investors have responded positively to the rumors, with Intel’s stock jumping 10.5% in afternoon trading. Analyst Mark Lipacis of Evercore estimates that Intel’s total worth could rise from its current market cap of $102 billion to as much as $237 billion if a breakup is executed properly. However, he cautioned that regulatory scrutiny from both the U.S. and China could slow or even derail any deal.
Bank of America’s (BAC) Vivek Arya echoed these concerns, noting that “any potential INTC split could be time-consuming and complicated.” Meanwhile, Raymond James analysts suggested that a joint venture between Intel and TSM—rather than a full takeover—might be a more politically viable option.
With Intel’s financial health deteriorating—fourth-quarter sales fell 7% year-over-year, and net earnings plunged 76%—the company is under immense pressure to find a solution that satisfies shareholders and regulators alike. Whether through a breakup, a strategic partnership, or another restructuring effort, Intel’s next move could define the future of the U.S. semiconductor industry.
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