Intel Stock Surges amid Rumors of Potential Deals with Broadcom and TSMC

Intel (INTC) shares jumped 16% Tuesday after a report emerged that industry rivals Broadcom (AVGO) and TSMC (TSM) are exploring potential deals involving the chipmaker's potential split.

The Wall Street Journal reported Saturday that Broadcom is considering a bid for Intel's product business, which focuses on designing semiconductors for computers and servers. TSMC, according to sources cited by the Journal, has also expressed interest in acquiring some or all of Intel's manufacturing facilities, potentially through an investor consortium.

While no formal proposals have been submitted to Intel, the discussions are described as preliminary and informal. Broadcom shares declined nearly 2% Tuesday, while US-listed TSMC shares fell less than 1%.

Intel's 16% gain Tuesday marked its largest single-day jump since March 2020. It also represents a 38.5% surge over the past five days, the company's largest historic gain as a publicly traded entity.

The news comes amid a surge in Intel's stock over the past week. The company notched its largest weekly gain since 2000 last Friday after the US pledged support for domestic chipmaking. Reports also surfaced of the US government's alleged talks with TSMC to support Intel's turnaround efforts.

Intel's manufacturing division, traditionally focused on producing chips for its own product business, launched a foundry business in 2022 under the leadership of then-CEO Pat Gelsinger. The move was part of an attempt to boost the struggling manufacturing arm, which has faced setbacks since the mid-2010s.

However, the turnaround effort has yet to bear fruit. Intel's manufacturing business has struggled to attract external customers and continues to lose money. Poor earnings performance throughout 2024 led to a 60% decline in the stock's value last year, prompting Gelsinger's departure in December.

Intel has become an acquisition target, with reports of potential takeovers by Qualcomm (QCOM), Arm (ARM), and Apollo emerging last year. Wall Street analysts generally support the idea of splitting Intel's businesses into two, with Raymond James analyst Srini Pajjuri stating, "Splitting Intel Product and Foundry is the key to unlocking value."

Last year, Intel announced plans to create an independent subsidiary for its foundry business, separating its finances and operations from its product division. Analysts saw this move as a potential precursor to a split.

However, some analysts remain skeptical about an Intel breakup. Bank of America's Vivek Arya notes that "any potential INTC split could be time-consuming and complicated," highlighting constraints related to Intel's CHIPS Act funding and potential regulatory hurdles from China.