- Chip stock has rallied from $19.10 to $27.39
- Speculation that Broadcom and TSMC are mulling bids
- Splitting chip design and foundry units seen as unlocking value
Intel (INTC:NASDAQ) has been on a roll lately, the stock rallying 43% since 7 February, as rumours swirl that could be broken up and sold off.
According to The Wall Street Journal, two semiconductor giants, Broadcom (AVGO:NASDAQ) and TSMC (TSM:NYSE), are considering potential deals for the fallen chip giant that could release billions of dollars of value for Intel shareholders.
Broadcom has been closely evaluating Intel’s chip design and marketing unit but is seeking a partner to take over Intel’s chip manufacturing business before making a move. TSMC has studied the possibility of acquiring some or all of Intel’s chip plants, either independently or as part of an investor consortium, according to reports.
Intel has already begun looking at how a process of splitting itself in two might look in the wake of the shock departure of former CEO Pat Gelsinger in December 2024, a move some analysts see as a precursor to a full break-up.
Reports that suggest private equity firm Silver Lake Capital is in advanced talks to buy a majority Stake in Intel’s Altera for $16 billion could be another step in this direction.
Altera is an expert in programmable logic devices and field-programmable gate arrays which are essential components in various applications, from automotive to aerospace and defence.
Intel recently said it plans to spin-off its venture capital arm.
END OF INTEL, OR NEW BEGINNING
If both Broadcom and TSMC acquisition deals were to go through, Intel as we know it would cease to exist, transitioning into two separate companies. This move would align with the semiconductor industry's broader trend where companies have increasingly specialised in either chip manufacturing or chip design, but not both.
Raymond James analyst Srini Pajjuri has previously said, ‘in our view, splitting Intel product and foundry is the key to unlocking value.’
Evercore analyst Mark Lipacis noted that if Intel were to separate its design and foundry businesses, the two units could be worth more than $237 billion, or $54.18 per share, based on ‘stronger financial performance forecasts’ for each of Intel’s components.
However, such a deal would also face challenges, not least from the Federal Trade Commission.
