Raymond James analysts believe separating Intel’s (NASDAQ: INTC) Product and Foundry businesses is the best way to unlock shareholder value. In a note released Tuesday, the firm highlighted growing speculation that Broadcom (NASDAQ: AVGO) considered acquiring Intel’s Product division—if a suitable partner could be found for Intel Foundry.
The analysts wrote,
“In our view, splitting Intel Product and Foundry is the key to unlocking value.”
While a potential merger and acquisition (M&A) deal could create value, analysts warned of possible regulatory hurdles in China. Instead, Raymond James suggested an alternative approach:
“The scenario that presents the best outcome for most parties (if not all) is one where U.S. Fabless companies take an equity stake in Intel Foundry, commit some wafer volumes, and spin it off into a separate unit.”
Under this model, Intel Products could trade at a low-teens price-to-earnings (P/E) ratio, implying a $135-140 billion valuation. Analysts also see further upside if Broadcom proceeds with an acquisition, though much depends on the success of Intel’s 18A process in attracting investment.
Broadcom CEO Hock Tan has previously expressed interest in acquiring major semiconductor assets like Intel (NASDAQ: INTC). However, Raymond James noted that any deal would require U.S. government backing and assurances of regulatory support. If a deal is reached, Broadcom is expected to focus on cost-cutting, price adjustments, and improving Intel Product’s operating margins.
Meanwhile, TSMC (NYSE: TSM) is unlikely to acquire Intel’s fabs, as it prioritizes expanding its U.S. manufacturing footprint. Semiconductor capital equipment firms (SemiCaps) could also benefit, particularly if U.S. policymakers ease export controls on chipmaking tools to gain China’s approval for any potential deal.
