Intel (NASDAQ: INTC) stock surged over 10% on Tuesday following a report indicating that rivals Broadcom (NASDAQ: AVGO) and Taiwan Semiconductor Manufacturing Company (NYSE: TSM) are exploring potential deals to split the company into two separate entities.
According to a report from The Wall Street Journal on Saturday, Broadcom is considering a bid for Intel’s product division, which focuses on designing semiconductors for computers and servers. The Journal also reported that TSMC has expressed interest in controlling some or all of Intel’s manufacturing plants, potentially as part of an investor consortium. However, the companies have not formally submitted any proposals to Intel, and the discussions remain informal and in the early stages.
While Intel stock surged, shares of Broadcom dropped -2.54% and US-listed TSMC shares declined by over 1%.
Intel stock has experienced a significant surge this past week, achieving its largest weekly gain since 2000. This rally came after the US expressed support for domestic chipmaking and reports suggesting that the US government is collaborating with TSMC to assist Intel in its turnaround efforts.
Intel’s manufacturing division, which primarily makes chips for its own products, began offering foundry services to external customers in 2022 under then-CEO Pat Gelsinger. The move was part of Intel’s strategy to compete with TSMC, aiming to stabilize its struggling manufacturing unit. Despite this effort, Intel’s foundry business has faced difficulties, including a lack of external customers and ongoing financial losses. The company’s disappointing earnings throughout 2024 and a significant 60% stock decline in 2024 led to Gelsinger’s ouster in December.
As Intel’s future remains uncertain, interest in the company has grown. Broadcom and TSMC’s potential involvement follows previous reports of takeover talks with other companies, including Qualcomm (NASDAQ: QCOM), Arm (NASDAQ: ARM), and Apollo.
Wall Street analysts have increasingly favored the idea of splitting Intel’s business into two separate entities. Raymond James analyst Srini Pajjuri noted that separating Intel’s product and foundry divisions could unlock significant shareholder value.
Last year, Intel (NASDAQ: INTC) announced plans to establish an independent subsidiary for its foundry business, separating its finances and operations from its products division. However, analysts have pointed out that Intel’s participation in the US CHIPS Act limits its ability to completely divest from its manufacturing business.
