Intel Stock Surges on Potential Deals with Broadcom and TSMC

Introduction

Intel (INTC) stock experienced a significant gain following reports of potential deals involving Broadcom (AVGO) and TSMC (TSM).

Intel's Potential Split

The Wall Street Journal reported that Broadcom might bid for Intel's product business, which produces semiconductors for computers and servers. Additionally, TSMC has considered acquiring some or all of Intel's factories as part of a potential investor consortium.

Market Reaction

Following the news, Intel stock jumped 13% on Tuesday. Conversely, Broadcom shares declined over 4%, while TSMC's US-listed shares saw a slight decline of less than 1%.

Intel's Recent Performance

Intel stock has performed remarkably well over the past week, achieving its most significant weekly gain since 2000. This surge was fueled by US support for domestic chipmaking and news of government efforts to assist Intel's turnaround.

Intel's Turnaround Efforts

Intel's manufacturing unit has faced challenges in attracting external customers and generating revenue. This has led to disappointing earnings and a 60% stock decline in 2024.

Potential Acquisition Interest

Intel has become a target for acquisition, with interest from companies such as Qualcomm, Arm, and Apollo. Wall Street analysts believe that splitting Intel's business into two would create value for investors.

Intel's Foundry Business

Intel announced plans to establish an independent foundry business, separating its finances and operations from the product division. This move has been seen as a potential precursor to a split, although the CHIPS Act limits Intel's ability to fully divest its manufacturing business.