Intel Stock Drops After Analysts Express Skepticism Over Potential Breakup Deals

Intel (INTC) shares fell 6% on Wednesday, reversing a significant upswing that saw the stock notch its largest five-day gain in its history as a publicly traded company. The decline occurred after analysts raised doubts about recent reports of potential deals with TSMC (TSM) and Broadcom (AVGO) that could lead to a breakup of the iconic US chipmaker.

TSMC and Intel Manufacturing Concerns

Analysts expressed skepticism over the feasibility of a potential deal between Intel and TSMC. Citi analyst Christopher Danley highlighted that the two companies use different manufacturing processes. Intel's chips are designed specifically for its own manufacturing processes, so it would not make sense for TSMC to take control of Intel's manufacturing facilities.

Regulatory Scrutiny

A TSMC-Intel deal could also face antitrust scrutiny from regulators, both domestically and internationally. Chinese authorities would need to approve the deal, and they may have concerns about market dominance. Additionally, the US government might be wary of a foreign entity acquiring a major US technology company.

Broadcom's Potential Interest

Regarding Broadcom's potential interest in Intel's product business, Danley believes that Broadcom would need to acquire the entire company, not just a portion of it, for such a deal to be successful. He stated that there are significant synergies between Intel's manufacturing and design divisions.

Intel's Stance

Analysts indicate that Intel is unlikely to favor potential breakup deals. The company has emphasized that its own manufacturing process is on track to become competitive with TSMC's by the end of 2025. Intel also maintains that it has sufficient financial resources to support its operations in the meantime.

Analysts' Skepticism

Analysts have expressed further concerns about the potential benefits of a TSMC-Intel joint venture. They argue that it would not make strategic sense for TSMC to assist a competitor in gaining market share.