Intel’s stock (INTC) surged more than 11% on Tuesday following a Wall Street Journal report that Broadcom and Taiwan Semiconductor Manufacturing Co. (TSMC) are exploring potential bids that could lead to splitting up the embattled chipmaker.
Broadcom is interested in acquiring Intel’s chip design and marketing business, while TSMC is considering a stake or full control of its manufacturing facilities, WSJ reported citing sources.
While discussions remain informal and no official bids have been submitted, the report has fuelled speculation over a major restructuring at Intel.
The company has struggled to compete in the semiconductor industry, particularly in artificial intelligence (AI) chips, where rivals like Nvidia and AMD have taken the lead.
Intel’s foundry business, launched in 2022 to manufacture chips for external clients, has also failed to gain traction.
INTC stock rallies after steep losses
Tuesday’s rally follows years of struggles for Intel.
The company’s stock lost 60% of its value in 2024, and it hit its lowest level since 2013 after posting weak earnings in August.
That report triggered Intel’s worst stock market performance in 50 years, leading to an announcement that 15% of its workforce would be cut.
Investor confidence continued to erode in the following months.
By December, the board ousted CEO Pat Gelsinger amid concerns over his ability to turn around the company.
However, recent political developments have given Intel a short-term boost. Last week, shares jumped 6% after US Vice President JD Vance pledged to support AI chip production on American soil.
Despite Tuesday’s gains, Intel’s stock remains down nearly 50% over the past year and has lost 65% of its value in five years.
Analysts and investors are increasingly looking at a potential breakup as a way to unlock shareholder value.
Split between Broadcom and TSMC could increase Intel’s total worth: analysts
The prospect of a split has been gaining traction among analysts.
Evercore analyst Mark Lipacis estimates that Intel’s total worth could range between $167 billion and $237 billion if its businesses were separated.
This valuation is significantly higher than its current market capitalization of $102 billion.
A breakup could allow Intel to focus on its strengths.
Historically, the company has operated both as a chip designer and a manufacturer, a model that has struggled in recent years.
Separating the two could help each business operate more efficiently and attract investors looking for clearer financial performance.
However, any deal involving Intel’s foundry business would face obstacles.
The US government has heavily invested in Intel’s manufacturing through the CHIPS Act, which requires the company to retain at least 50% ownership of its foundry operations.
This restriction would complicate any potential sale to TSMC or other foreign entities.
Regulatory challenges and government concerns
The US government’s role in Intel’s future cannot be ignored.
Intel was awarded $3 billion in CHIPS Act funding last year to expand domestic semiconductor production, and any sale of its manufacturing assets would need to align with national security policies.
Bank of America analyst Vivek Arya has warned that the Trump administration may oppose any deal that gives a foreign company control over Intel’s factories, particularly given the company’s close ties to US defense contracts.
“The US government could be wary of a foreign entity completely taking over an iconic US firm that has deep involvement with US Department of Defense customers,” Arya wrote in a note to investors.
Regulatory scrutiny would not be limited to the US.
A transaction of this scale would also require approval from authorities in multiple countries, including China.
Given the ongoing tensions between the US and China over semiconductor supply chains, regulatory approval could become a significant hurdle.
Wall Street analysts favor a split
Despite the regulatory complexities, analysts have long argued that splitting Intel into separate businesses would benefit shareholders.
Raymond James analyst Srini Pajjuri stated that “dividing Intel Product and Foundry is the key to unlocking value.”
Intel has already begun moving in this direction.
Last year, the company announced plans to establish an independent subsidiary for its foundry business, effectively separating it from its chip design segment.
While this move stops short of a full breakup, it has been viewed as a step toward an eventual split.
Bernstein analyst Stacy Rasgon believes Broadcom CEO Hock Tan could be the right executive to take over Intel’s product business.
“Hock [Tan] has shown the ability to take a hatchet to costs, ruthlessly, while still preserving innovation,” Rasgon wrote of Broadcom’s CEO in a note Tuesday morning.
Intel’s leadership in transition
Beyond the potential restructuring, Intel’s leadership remains in flux.
After Gelsinger’s departure, CFO David Zinsner and former client computing head Michelle Johnston Holthaus were named interim co-CEOs.
However, Wall Street insiders believe the company will look externally for a permanent replacement.
Whoever takes over will face an enormous challenge.
In addition to managing a potential breakup, the new CEO must stabilize Intel’s finances, restore investor confidence, and navigate its relationship with the US government.
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