Intel Faces Breakup Rumors Amidst Market Challenges
Shareholder Value Considerations
Intel (INTC) is reportedly exploring strategic options to enhance shareholder value as it navigates market headwinds. The company is rumored to be considering potential deals with Taiwan Semiconductor (TSM) and Broadcom (AVGO) that could lead to a breakup.
Chipmaker Interest
TSM is reportedly interested in acquiring some or all of Intel's chipmaking facilities, while Broadcom seeks to control its lucrative chip design and marketing operations. Intel declined to comment on the rumors.
Analyst Estimates
Evercore analyst Mark Lipacis estimates that a breakup could unlock substantial value for Intel shareholders. Using conservative projections, Lipacis values the company at $167 billion or $38.24 per share. However, he notes that realizing this value through a deal could be complex and face regulatory hurdles.
Regulatory Concerns
Wall Street analysts have raised concerns regarding regulatory and antitrust implications. Bank of America's Vivek Arya cites potential issues related to Intel's CHIPS Act funding, which requires it to retain majority ownership of its foundry. Raymond James analyst Srini Pajjuri suggests that the US government may prefer encouraging TSM to expand its manufacturing footprint independently.
Broadcom's Fit
Bernstein analyst Stacy Rasgon views Broadcom as a suitable candidate to acquire Intel's products business, citing its CEO's ability to drive innovation while optimizing costs.
Leadership Changes and Financial Performance
Intel recently replaced CEO Pat Gelsinger with interim co-CEOs David Zinsner and Michelle Johnston Holthaus. The company has faced challenges in recent months, with a decline in sales and earnings and a missed financial target.
US Strategic Implications
The potential breakup of Intel has broader implications for the United States. Microsoft co-founder Bill Gates highlighted the importance of developing a credible domestic alternative to TSM and Samsung in chip manufacturing.