Intel Jumps 16% on Potential Deals with Broadcom, TSMC
Wall Street Journal: Broadcom (AVGO) may bid for Intel's (INTC) product business, while TSMC (TSM) could acquire parts of its manufacturing operations.
Market Impact:
* INTC surged 16% Tuesday, its largest single-day gain since March 2020.
* AVGO declined nearly 2%, while TSM fell less than 1%.
Background:
* Intel's manufacturing business primarily serves its own needs but began accepting external customers in 2022.
* The division has struggled to compete with TSMC in manufacturing prowess and has reported cash losses.
Possible Breakup:
* Wall Street analysts support Intel splitting into two entities: product and foundry.
* Intel established a subsidiary for its foundry business last year.
* Bank of America analysts note potential complications with US CHIPS Act funding and regulatory hurdles.
Industry Context:
* Intel has been exploring turnaround efforts and has faced takeover interest from Qualcomm (QCOM), Arm (ARM), and Apollo.
* The US government has expressed support for domestic chipmaking, including talks with TSMC to assist Intel's recovery.