Intel Stock Surges on Potential Deal Speculation with Broadcom and TSMC
Intel Corporation's (INTC) stock saw a significant 10.30% increase on Tuesday, driven by reports of potential deals with Broadcom (AVGO) and TSMC (TSM).
Deal Considerations
The Wall Street Journal reported that Broadcom is exploring a bid for Intel's product business, which designs semiconductors for computers and servers. TSMC, on the other hand, has reportedly considered acquiring some or all of Intel's manufacturing facilities, potentially as part of an investor consortium.
Market Reaction
News of the potential deals sent Broadcom shares down 2.5% on Tuesday, while US-listed TSMC shares declined by less than 1%. Intel's stock has been on a strong upward trend over the past week, fueled by positive developments in the domestic chipmaking industry.
Intel's Foundry Business
Intel's manufacturing division, responsible for producing chips for its own products, has recently opened up to external customers under the leadership of former CEO Pat Gelsinger. The effort to establish a foundry business competitive with TSMC has faced challenges and impacted Intel's financial performance.
Analyst View
Wall Street analysts have advocated for Intel to split its business into two separate entities. Raymond James analyst Srini Pajjuri emphasized that splitting Intel's product and foundry operations would unlock value for the company.
Future Outlook
Intel has announced plans to create an independent subsidiary for its foundry business, suggesting a potential path towards a full split. However, Intel's US CHIPS Act funding may limit its ability to fully sell its manufacturing operations.