Intel Stock Surges on Potential Deals with Broadcom and TSMC
Key Takeaways
* Intel (INTC) shares soared 13.73% on Tuesday amid reports of potential deals with Broadcom (AVGO) and TSMC (TSM).
* Broadcom is reportedly considering a bid for Intel's product business, while TSMC is exploring control of Intel's manufacturing facilities.
* Intel's manufacturing arm has faced challenges, leading to investor disappointment and a 60% stock decline in 2023.
* Analysts favor a split of Intel's business into two entities to unlock value.
Intel's stock has witnessed significant growth over the past week, buoyed by US support for domestic chipmaking and speculation of government assistance from TSMC. Intel's manufacturing division, established in 2022, has encountered difficulties in attracting external clients and has incurred financial losses.
Despite attempts to revive its manufacturing operations, Intel's efforts have been hampered by production setbacks. The company's earnings have disappointed investors, prompting the ouster of CEO Pat Gelsinger in December. Intel has subsequently emerged as an acquisition target, with reports of potential takeovers from Qualcomm, Arm, and Apollo.
Wall Street analysts advocate for a division of Intel's operations, with Raymond James analyst Srinu Pajjuri emphasizing the potential for value creation. Intel announced plans to separate its foundry business as an independent subsidiary last year, a move perceived as a precursor to a potential split. However, the company's US CHIPS Act funding imposes limitations on the full sale of its manufacturing division.