Intel Stock Surges on Deal Rumors with Broadcom and TSMC
Intel Corporation (INTC) witnessed an impressive 16% stock surge on Tuesday as rumors emerged regarding potential acquisitions by Broadcom (AVGO) and Taiwan Semiconductor Manufacturing Company (TSM).
According to a report published in The Wall Street Journal, Broadcom is exploring a bid for Intel's product business, which focuses on semiconductor design for computers and servers. Meanwhile, TSMC is reportedly considering acquiring a stake in Intel's manufacturing facilities, potentially as part of an investment consortium.
The discussions are preliminary and no formal proposals have been submitted, the Journal noted. Despite this, Broadcom shares declined nearly 2% on Tuesday, while US-listed TSMC shares experienced a minimal 1% drop.
Intel's 16% gain represents its largest single-day jump since March 2020 and brings the total increase over the past five days to an impressive 38.5%. This surge marks the most significant gain in the company's history as a publicly traded entity.
The stock has witnessed a remarkable run over the past week, posting its highest weekly gain since 2000. This growth has been attributed to US support for domestic chipmaking and reports of potential government talks with TSMC to bolster Intel's turnaround efforts.
Intel's pivot towards a foundry business, catering to external customers, has faced challenges in attracting clients and incurring financial losses. This underperformance contributed to disappointing earnings throughout 2024 and a 60% stock decline over the past year, eventually leading to the ouster of CEO Pat Gelsinger.
Wall Street analysts have expressed support for a business split, with Raymond James analyst Srini Pajjuri stating that "splitting Intel Product and Foundry is the key to unlocking value." Intel announced plans in 2022 to establish an independent subsidiary for its foundry business, paving the way for a potential division.
While some analysts remain optimistic, Bank of America's Vivek Arya cautions that any potential split could be complex and time-consuming, given limitations related to Intel's CHIPS Act funding and regulatory concerns from China.