Intel Jumps 16% on Rumors of Broadcom, TSMC Deal Negotiations
Intel (INTC) shares surged 16% on Tuesday following reports that Broadcom (AVGO) and TSMC (TSM) are exploring potential deals to acquire or collaborate with the chipmaker.
According to The Wall Street Journal, Broadcom is considering a bid for Intel's product business, which includes semiconductor designs for computers and servers. TSMC, on the other hand, is reportedly eyeing ownership of all or a portion of Intel's manufacturing facilities.
Shares of Broadcom declined nearly 2% on Tuesday, while US-listed TSMC shares slipped less than 1%. Intel's substantial gain marks its largest single-day increase since March 2020.
Intel's Recent Rally
Intel's stock has been on a remarkable upward trajectory in recent days. Last Friday, it recorded its most significant weekly gain since 2000, driven by US support for domestic chip production and reports of government discussions with TSMC regarding Intel's turnaround efforts.
Intel's Foundry Business
Intel primarily manufactures chips for its own use. In 2022, it established a foundry business to produce chips for external customers under the leadership of then-CEO Pat Gelsinger. However, this venture has encountered challenges, bleeding cash and struggling to attract customers.
Potential Split
Wall Street analysts have advocated for Intel to divide its business into separate product and foundry units. Raymond James analyst Srini Pajjuri recently stated that "splitting Intel Product and Foundry is the key to unlocking value."
Intel has announced plans to create a separate subsidiary for its foundry business, indicating a potential split. However, analysts have expressed concerns about the time and complexity involved, as well as regulatory hurdles and antitrust considerations, particularly from China.