Intel (NASDAQ: $INTC), a leading tech company in the development of semiconductor products, technologies, and solutions, could be on the verge of splitting. According to an exclusive report by The Wall Street Journal, TSMC and Broadcom are looking into a deal to buy off Intel. Below are the details of the possible split.
Details Of The Possible Intel Split
The WSJ report states that Intel is facing potential joint acquisition deal from Broadcom, and Intel. They are working together on a potential deal that could see Intel’s operations split in two. Broadcom is eyeing the chip design and marketing divisions, while TSMC is looking to take over the chip making plants.
Broadcom has begun informal discussions with advisors on the potential buyout. However, a deal would only go forward if it could find a partner to take over the manufacturing plants. This aligns with Broadcom’s expansion strategy through acquisitions.
Meanwhile, TSMC, which is the world’s biggest contract chip manufacturer, could potentially form a consortium to take over Intel’s chip plants. That would further bolster its position in the semiconductor industry. Thus far, those talks are in early stages, and no formal commitments have been made.
Intel’s Struggles
Pat Gelsinger, intel’s former CEO was ousted in December 2024 after a series of setbacks, including delays in new plants, a decline in its AI chip market share, and dependence of government subsidies to fund expansions. Its chipmaking segment reported losses of $7 billion in 2023, and its share price fell 60%. Those setbacks have made the giant chipmaker a prime target for acquisition.
Possible Regulatory Hurdles
While the deal could benefit Broadcom and TSMC, it could also face major regulatory hurdles. Trump’s administration has voiced concerns about foreign ownership of Intel’s US-based fabs. Consequently, a TSMC takeover is unlikely to get government approval.
The US government has unveiled monetary incentives to rejuvenate US chip manufacturing, which would dent any efforts by TSMC and Broadcom to acquire Intel. As such, both companies will have to navigate major regulatory hurdles, and find domestic partners that meet national security requirements.
Intel Stock Performance
Intel (INTC) is up 18.47% in the past six months to $23.60 per share. However, it has been down 46.59% in the past 12 months and 12.43% in the past two years, with a market cap of $102.19 billion. Meanwhile, TSMC has been up 21.21% in the past six months and 83.91% in the past 12 months, with a market cap of $6 trillion. Overall, Intel has underperformed the market and its peers as the AI chip race heats up.
Analysts give INTC stock an overall hold rating, with an average price target of $22.40, which is a 5.08% downside as of Friday’s closing price. The most optimistic forecast is a price of $34, while the most pessimistic forecast is a price of $18.
Is Intel A Buy Amid Takeover Rumors?
Amid buyout rumors, INTC could potentially be a great stock to have in your portfolio. Stocks typically experience a surge in stock price once a buyout is announced. Additionally, there is going to be reduced risk since a buyout offer establishes a floor price for the stock. It could also be a great opportunity to gain exposure to the AI chip industry at a low price compared to more expensive stock in the sector.
However, there is also the risk that lawmakers could reject the deal as the US seeks to shore up its chip manufacturing capabilities. As such, the analysts’ hold rating could potentially reflect the best course of action in the medium term.
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