Intel Stock Soars on Deal Rumors with Rival Chipmakers
Intel's stock (INTC) experienced a significant increase of 16% on Tuesday, driven by reports indicating potential deals with Broadcom (AVGO) and TSMC (TSM).
According to the Wall Street Journal, Broadcom is considering acquiring Intel's product business, while TSMC is exploring options for controlling Intel's manufacturing facilities. These discussions are reportedly preliminary and have not progressed to formal proposals.
The positive news overshadowed declines in Broadcom's stock (down nearly 2%) and TSMC's US-listed shares (down less than 1%). Intel's 16% gain marked its largest single-day jump since March 2020.
Intel's stock has been performing exceptionally well over the past week, notching its largest weekly gain since 2000. This surge comes amid US government support for domestic chipmaking and reports of talks with TSMC to aid Intel's revitalization efforts.
CEO Pat Gelsinger's push to establish a competitive foundry business has faced challenges, leading to disappointing earnings and a 60% decline in Intel's stock price last year. Gelsinger was replaced by the company's board in December, making Intel a potential acquisition target.
Wall Street analysts have advocated for Intel to split its business, with Raymond James analyst Srini Pajjuri emphasizing the potential for value creation. Intel announced plans for an independent foundry subsidiary last year.
However, some analysts are cautious about a potential breakup, citing complexities related to Intel's US CHIPS Act funding and regulatory concerns in China.