Intel Explores Potential Deals with Broadcom, TSMC Amid Acquisition Speculation

High-Level Summary:

Intel (INTC) shares surged Tuesday after reports emerged that Broadcom (AVGO) and TSMC (TSM) are considering potential deals that could split the chipmaker into two.

Key Details:

* The Wall Street Journal reported that Broadcom is contemplating a bid for Intel's product business, which designs semiconductors for computers and servers.
* TSMC has reportedly examined acquiring some or all of Intel's factories, potentially through an investor consortium.
* Broadcom shares declined 2.5% on Tuesday, while TSMC shares listed in the US saw a modest decline.

Intel's Recent Performance:

* Intel stock has experienced a significant rally in the past week, posting its highest weekly gain since 2000.
* The surge followed reports of US support for domestic chipmaking and TSMC's potential involvement in Intel's turnaround efforts.

Intel's Turnaround Strategy:

* Intel's manufacturing business primarily produces chips for its product division but began accepting external customers in 2022, following a push by former CEO Pat Gelsinger.
* The move aimed to establish a foundry business that could rival TSMC, but the effort has faced challenges and cash burn.

Acquisition Interest:

* Intel's struggles have made it a prime acquisition target, with potential interest from Qualcomm (QCOM), Arm (ARM), and Apollo reported last year.
* Wall Street analysts have endorsed the idea of Intel splitting its business in two, with Raymond James analyst Srini Pajjuri stating that "splitting Intel Product and Foundry is the key to unlocking value."

Future Outlook:

* Intel intends to create an independent subsidiary for its foundry business, separating it financially and operationally from its product division.
* Analysts view this move as a potential precursor to a split, although Intel's CHIPS Act funding may limit its ability to fully sell its manufacturing arm.