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Chip pioneer Intel (INTC+15.11%) could see its faltering business be split up by its rivals.
The chipmaker has become an acquisition target for its competitors amid recent struggles to compete for dominance in artificial intelligence chips. The company, which rose to prominence with its central processing chips for personal computers and data centers, announced in August that it was laying off more than 15% of employees as part of a plan to reduce capital expenditures by more than $10 billion this year.
Intel was reported in August to be working with its longtime investment bankers at Morgan Stanley (MS+1.00%) and Goldman Sachs (GS+1.20%) on options to fix its business, including by splitting its foundry division (which designs and manufactures chips), cutting factory projects, and mergers and acquisitions, according to Bloomberg. Meanwhile, Qualcomm (QCOM+0.73%), which designs smartphone chips, was interested in buying parts of Intel’s business, Reuters reported in September.
Now, the chipmaker is reportedly facing separate potential deals that could split its business in two. Broadcom (AVGO-2.03%) and Taiwan Semiconductor Manufacturing Company (TSM-0.70%) (TSMC) are interested in Intel’s chip design and manufacturing businesses, the Wall Street Journal reported, citing unnamed people familiar with the matter.
Intel’s shares climbed by 10% on Tuesday morning after the report, and is up by almost 30% so far this year. However, the chipmaker’s stock is down by more than 40% year over year.
TSMC declined to comment. Neither Intel nor Broadcom immediately responded to requests for comment.
Here’s what to know about the potential deals that could leave Intel split in two.
What does Broadcom want?
Broadcom, which designs and develops chips used in smartphones and data centers, is reportedly looking into Intel’s chip design and marketing unit. The company has held informal discussions about making a bid with its advisors, but likely won’t follow through unless it finds a partner to take over Intel’s manufacturing side, people told the Wall Street Journal.
The chipmaker has not made an offer, and could decide not to bid, the Wall Street Journal reported.
What does TSMC want?
TSMC is reportedly interested in Intel’s chip manufacturing plants. The Taiwanese chipmaker could potentially join an investor consortium or find another way to control some or all of the factories, the Wall Street Journal reported.
The Trump administration reportedly asked TSMC to consider taking over Intel’s chip plants, but a White House spokesperson told Quartz that President Donald Trump is unlikely to support a non-U.S. company operating the foundry.
Frank Yeary, the interim executive chairman of Intel, has discussed a deal with Trump administration officials and TSMC executives to separate Intel’s manufacturing business, the New York Times reported. Trump’s nominee for commerce secretary, Howard Lutnick, has reportedly been involved in the discussions.
The U.S. government would have to sign off on a deal between TSMC and Intel. The Taiwanese chipmaker could also face challenges from the Trump administration’s restrictions on immigration, considering that a large part of its engineering team is from Taiwan and other places abroad, people told the Wall Street Journal.
Both Intel and TSMC received funding from the Biden administration’s Chips and Science Act, which was focused on boosting semiconductor manufacturing, research, and development in the U.S.