Intel Stock Plunges 6% as Deal Rumors Stir Skepticism
Intel (INTC) shares plummeted 6.10% on Wednesday, snapping a significant five-day rally that saw the stock notch its largest gain in its history as a publicly traded company.
TSMC and Broadcom Buyout Speculation
The decline followed skepticism expressed by analysts over recent reports of potential deals with Taiwan Semiconductor Manufacturing Company (TSM) and Broadcom (AVGO). The Wall Street Journal reported over the weekend that TSMC had considered acquiring part or all of Intel's semiconductor factories, while Broadcom was reportedly weighing a bid for Intel's product business.
Analyst Concerns over Breakup
Citi analyst Christopher Danely highlighted the distinct manufacturing processes used by TSMC and Intel, making it impractical for TSMC to take control of Intel's facilities. Danely also expressed concerns about potential antitrust issues and regulatory scrutiny from domestic and international authorities, including China.
Foundry Struggles and Acquisition Target
Intel's decision to open its manufacturing business to external customers through its foundry in 2022 has yet to materialize significant results. Analysts attribute this to Intel's product business losing market share to rivals. Consequently, Intel has become an acquisition target in recent months.
Broadcom Bid Considerations
Danely emphasized that a successful Broadcom acquisition would require purchasing the entire company, not just the product business. Despite this, analysts believe Intel is unlikely to favor such deals, as the company maintains confidence in its manufacturing process becoming competitive with TSMC's.
TSMC Joint Venture Unlikely
Analysts also expressed skepticism about the possibility of a TSMC-Intel joint venture. Danely questioned the logic of TSMC supporting Intel's competitiveness.
Note: This article is for informational purposes only and does not constitute financial advice.