Intel (INTC) shares soared 16% on Tuesday following reports that its competitors, Broadcom (AVGO) and TSMC (TSM), are considering potential deals with the chipmaker that could result in a company split.
The Wall Street Journal reported late Saturday that Broadcom is evaluating a bid for Intel’s product business, which designs semiconductors for computers and servers. The report, citing sources familiar with the matter, also stated that TSMC is exploring the possibility of acquiring some or all of Intel’s manufacturing facilities, potentially as part of an investor consortium. However, no formal offers have been submitted to Intel, and discussions remain in the early, informal stages.
Following the news, Broadcom shares dipped nearly 2% on Tuesday, while US-listed TSMC shares declined by less than 1%.
Intel’s 16% surge on Tuesday marked its largest single-day gain since March 2020. Over the past five trading days, the stock has skyrocketed by 38.5%, marking the biggest five-day gain in Intel’s history as a publicly traded company.
The stock’s recent rally was fueled by optimism surrounding US government support for domestic chip manufacturing and reports that US officials were in talks with TSMC to aid Intel’s restructuring efforts. Last Friday, Intel recorded its largest weekly gain since 2000.
Intel’s manufacturing arm primarily produces chips for its own products but expanded into contract chipmaking in 2022 under then-CEO Pat Gelsinger. His goal was to establish Intel as a competitive foundry against TSMC and revitalize its struggling manufacturing sector, which had faced setbacks since the mid-2010s.
Despite these efforts, Intel’s foundry business has struggled to attract external customers and continues to operate at a loss. The company’s disappointing earnings in 2024 led to a nearly 60% stock decline last year, and Gelsinger was ousted by the board in December. The company has since become an acquisition target, with interest from Broadcom and TSMC following prior takeover speculations involving Qualcomm (QCOM), Arm (ARM), and Apollo.
Wall Street analysts have generally supported the idea of splitting Intel’s operations. Raymond James analyst Srini Pajjuri stated in a note to investors on Monday: “In our view, separating Intel’s Product and Foundry divisions is key to unlocking value.”
Intel had already announced plans last year to establish its foundry business as an independent subsidiary, financially and operationally distinct from its product division. Analysts interpreted this as a step toward a potential corporate split.
However, not all experts are optimistic about an Intel breakup. Bank of America’s Vivek Arya warned in a Tuesday note that “any potential INTC split could be time-consuming and complicated,” particularly due to US CHIPS Act restrictions, which limit Intel’s ability to fully divest its manufacturing business.
A potential Intel-TSMC deal could also face significant regulatory challenges and antitrust scrutiny, particularly from Chinese authorities, Arya added.
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