Potential Intel Breakup Spurs Surge in Stock Price
Key Points
* Intel (INTC) stock surged 16% following rumors of potential deals with Broadcom (AVGO) and TSMC (TSM).
* Broadcom reportedly eyes Intel's product business, while TSMC considers acquiring some or all of Intel's factories.
* The talks are preliminary, and no formal offers have been submitted.
* Intel's recent surge brings its gains to 38.5% over the past five days.
* Analysts favor splitting Intel into two separate entities, citing potential value unlocking.
Background
Intel's manufacturing business, initially intended for internal use, opened a foundry for external customers in 2022. This move was part of an effort to revitalize the company's struggling manufacturing division.
However, the turnaround has faced challenges, with Intel's manufacturing business failing to attract significant customers and incurring financial losses.
Market Reaction
Broadcom shares dipped nearly 2% after the deal rumors, while TSMC's US-listed shares declined less than 1%. Intel's 16% surge represents its largest single-day gain since March 2020.
Analyst Commentary
Raymond James analyst Srini Pajjuri believes a split of Intel's product and foundry businesses would unlock value for the company. Bank of America's Vivek Arya cautions that a breakup could be complex and lengthy due to funding constraints and potential regulatory hurdles.
Additional Information
Intel has announced plans to establish an independent subsidiary for its foundry business, potentially paving the way for a future split. Laura Bratton is a reporter for Yahoo Finance, which provides the latest stock market news and in-depth analysis.