Intel Stock Declines after Analysts Express Skepticism over Potential Deals

Key Points:

* Intel (INTC) shares fell 6.10% on Wednesday, reversing a recent surge.
* Analysts raised concerns about potential deals with TSMC and Broadcom.
* Intel's manufacturing process differs significantly from TSMC's, making a TSMC takeover unlikely.
* Regulatory scrutiny and the Trump administration's stance could further complicate potential deals.

In-Depth Analysis:

Intel's stock witnessed a substantial decline on Wednesday after a recent rally driven by reports of potential deals with TSMC and Broadcom. However, analysts have expressed skepticism about the feasibility of these transactions.

Citi analyst Christopher Danely noted that TSMC and Intel employ distinct manufacturing processes, making a TSMC takeover of Intel's manufacturing facilities impractical. Additionally, a TSMC-Intel deal would require approval from global regulators, including Chinese authorities, which could raise antitrust concerns.

The Trump administration has also expressed its concerns about foreign entities potentially acquiring iconic US firms, according to Bank of America analyst Vivek Arya.

Meanwhile, Danely stated that Broadcom would need to acquire Intel in its entirety, not just the product business, for a successful acquisition. Intel has recently struggled in its foundry business, which has failed to attract external customers and has lost market share to competitors.

Analysts also doubted TSMC's motivation to enter into a joint venture with Intel, as it could strengthen its competitor. "Why would TSMC help its competitor gain share versus itself? To me that just makes absolutely zero sense whatsoever," Danely said.

Intel's insistence on the competitiveness of its own manufacturing process, set to be ready for production by the end of 2025, further reduces the likelihood of it seeking external manufacturing support. "I actually don't think [Intel's] desperate for cash right now. They've got a few years of runway," said Bernstein analyst Stacy Rasgon.