Intel shares surged 13% on Tuesday following reports that Broadcom Inc. and Taiwan Semiconductor Manufacturing Co. (TSMC) are considering deals that could lead to the breakup of the chipmaker. The Wall Street Journal, citing people familiar with the matter, reported that Broadcom is exploring a bid for Intel's semiconductor design and marketing division, while TSMC is evaluating a stake or full acquisition of Intel's manufacturing operations.
The talks remain preliminary, with no formal bids submitted. Broadcom shares declined 4% on Tuesday, while U.S.-listed shares of TSMC dipped less than 1%.
Intel's stock has gained momentum in recent weeks, bolstered by optimism over domestic chipmaking initiatives and reports that the U.S. government is working with TSMC to support Intel's restructuring efforts. Last Friday, the company recorded its strongest weekly performance since 2000.
The Santa Clara, Calif.-based company has struggled to recover from manufacturing setbacks that date back to the mid-2010s. Under former CEO Pat Gelsinger, who was ousted in December, Intel attempted to establish itself as a major foundry player, opening its manufacturing facilities to external customers in 2022 to compete with TSMC. However, the foundry business has struggled to attract clients and remains unprofitable.
Intel's financial performance has faltered, with earnings repeatedly disappointing investors. The company's stock plummeted approximately 60% in 2024, erasing billions in market value. Last August, Intel shares suffered their worst single-day drop in 50 years after reporting weak quarterly results, and by September, CNBC reported that Qualcomm had approached Intel regarding a potential takeover. Other firms, including Arm Holdings and Apollo Global Management, were also linked to potential bids.
Investor sentiment has increasingly favored a split. "In our view, splitting Intel Product and Foundry is the key to unlocking value," wrote Raymond James analyst Srini Pajjuri in a note to clients Monday.
Intel announced last year that it would create an independent subsidiary for its foundry business, signaling a move toward operational separation. However, the U.S. CHIPS Act, which provides federal funding to support domestic semiconductor production, places restrictions on Intel's ability to fully divest its manufacturing operations.
Meanwhile, political support for domestic chip manufacturing has provided a tailwind for the sector. Intel shares climbed 6% last week after Vice President J.D. Vance emphasized the U.S. commitment to securing AI technologies from foreign adversaries and increasing domestic AI chip production.
With Tuesday's rally, Intel shares are up 32% in 2025, recovering from last year's steep losses. Broadcom shares declined 2% for the day, while Taiwan Semi's shares slipped slightly.
