Intel Sees Record Five-Day Surge Amid Speculation of Company Split

Image Credit: Reuters

Intel’s stock surged by 16% on Tuesday after reports emerged that rivals Broadcom (AVGO) and TSMC (TSM) are exploring potential deals to split Intel into two parts.

According to The Wall Street Journal, Broadcom is considering acquiring Intel’s product business, which designs semiconductors for computers and servers. TSMC, on the other hand, has shown interest in managing some or all of Intel's manufacturing plants, possibly through an investor consortium. However, no formal offers have been made, and the discussions are still in the early and informal stages.

While Intel's stock surged, Broadcom's shares dropped nearly 2%, and TSMC's US-listed stock fell less than 1%. Intel’s 16% gain marked its largest single-day rise since March 2020, boosting the stock’s value by 38.5% over the past five days, the highest five-day jump in Intel’s history. The surge follows a strong weekly performance, with Intel experiencing its biggest weekly gain since 2000.

The stock rally comes amid growing US support for domestic chip manufacturing and speculation that the US government may be collaborating with TSMC to aid Intel's recovery. Intel has been attempting to turn around its foundry business, which started taking on external clients in 2022 under former CEO Pat Gelsinger. Despite these efforts, the business has struggled and continued to lose money, with Intel’s earnings disappointing investors throughout 2024. This led to a significant 60% drop in Intel's stock last year, and Gelsinger was ousted in December.

As Intel continues to be seen as a potential acquisition target, interest from Broadcom and TSMC follows previous reports of takeover attempts by Qualcomm, Arm, and Apollo. Many analysts believe that splitting Intel into two separate entities—its product business and its foundry—could unlock greater value. Raymond James analyst Srini Pajjuri argued that such a move could be key to Intel’s recovery.

Intel announced plans last year to separate its foundry business into an independent subsidiary, which analysts view as a step toward a possible split. However, some analysts, including Bank of America’s Vivek Arya, are cautious, noting that any split would be complex and time-consuming, particularly due to restrictions on Intel's CHIPS Act funding. Furthermore, a potential deal with TSMC could face regulatory and antitrust challenges, especially from China.

 

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author