In a report, its rivals Broadcom (AVGO) and TSMC (TSM) are exploring potential deals with chip manufacturers, with the company's rivals Broadcom (AVGO) and TSMC (TSM) up as much as 5% on Tuesday Stocks, divide them into two parts.
The Wall Street Journal reported late Saturday that Broadcom (AVGO) is considering bidding for Intel's product business, which designs semiconductors for computers and servers. The magazine quoted people familiar with the matter, saying TSMC is considering controlling certain factories in Intel, which could be part of a consortium of investors. The journal writes that the two companies have not submitted a deal to Intel, and the negotiations are preliminary and informal.
Broadcom shares traded on Monday, while U.S.-listed TSMC shares rose slightly below 1%.
Intel stock has been crying over the past week. The stock has had the biggest weekly gains since last Friday in 2000, as the U.S. shows support for domestic chip production and reports that the U.S. government is working with TSMC to support Intel's turnaround efforts.
Intel's manufacturing business was mainly to make chips for itself (Intel's product business), but under the leadership of then-CEO Pat Gelsinger, it opened its foundry in 2022 (in other words, all taking over external customers). Gelsinger has pushed for a foundry business competitiveness with Taiwan’s TSMC to correct Intel’s struggling manufacturing division, which has suffered setbacks since the mid-2010s.
The turnaround efforts to date have not been successful given Intel's manufacturing business has been struggling to take on external customers and continue to bleed cash. Intel's revenue disappointed investors throughout 2024, with the stock falling by about 60% last year. Gelsinger was ousted by Intel's board of directors in December. The company has become a target for the acquisition, while Broadcom and TSMC interests follow the report of potential acquisitions from Qualcomm (QCOM), ARM (ARM) and Apollo last year.
Wall Street analysts agree that Intel split its business into two parts. "In our opinion, splitting Intel products and foundries is unlocking value," Raymond James analyst Srini Pajjuri wrote in a letter to investors on Monday. The key to it.”
Intel announced plans last year to establish an independent subsidiary for its foundry business, separating its finance and operations from its product division. Analysts see the move as paving the way for a potential split, although Intel's U.S. chip law funding limits its ability to sell its manufacturing operations fully.
Laura Bratton is a reporter for Yahoo Finance. Follow her on bluesky @laurabratton.bsky.social. Email her to laura.bratton@yahooinc.com.