Intel’s Potential Breakup Under Scrutiny
Rivals Eyeing Deals to Divide Chipmaker
Taiwan Semiconductor Manufacturing Co (TSMC) and Broadcom are reportedly eyeing potential deals that could break Intel into two, according to a recent report by the Wall Street Journal. The report cites sources familiar with the matter, stating that both companies are examining Intel’s chip design and manufacturing businesses.
Broadcom’s Interest
Broadcom has been closely examining Intel’s chip design and marketing business, with plans to bid on the company. However, the report notes that Broadcom would likely only proceed with a bid if it finds a partner for Intel’s manufacturing business.
TSMC’s Involvement
TSMC, the world’s largest contract chipmaker, has separately studied controlling some or all of Intel’s chip plants, potentially as part of an investor consortium or other structure. The report emphasizes that Broadcom and TSMC are not collaborating, and all discussions are preliminary and largely informal.
Intel’s Interim Chairman’s Focus
Intel’s interim executive chairman, Frank Yeary, has been leading discussions with potential suitors and Trump administration officials, who are concerned about the fate of a company seen as critical to national security. Yeary has reportedly emphasized his focus on maximizing value for Intel shareholders.
Government Involvement
A White House official told Reuters that the Trump administration might not support Intel’s US chip factories being operated by a foreign entity, citing a potential deal between TSMC and Intel. The official stated that the administration supports foreign companies investing and building in the US but is "unlikely" to support a foreign firm operating Intel’s factories.
Background
Intel is one of the largest beneficiaries of the US push to onshore critical chip manufacturing, led by former President Joe Biden’s administration. The company is set to receive a US$7.86 billion government subsidy. The US Commerce Department is finalizing the deal.
Company Overview
Intel is one of a few chipmakers that design and manufacture semiconductors. TSMC, with a market valuation about eight times larger than Intel’s, is a major customer of Intel’s rival, AMD, which is a significant player in the PC and server markets.
Conclusion
The potential breakup of Intel is a complex and fluid situation, with various parties involved and interested in the company’s assets. As the situation unfolds, it remains to be seen whether Intel will be broken up and how its various assets will be distributed.
FAQs
Q: What is the latest development in the potential breakup of Intel?
A: Rivals Taiwan Semiconductor Manufacturing Co (TSMC) and Broadcom are eyeing potential deals that could break Intel into two.
Q: What are the terms of the potential deal?
A: Broadcom has been examining Intel’s chip design and marketing business, with plans to bid on the company. TSMC has studied controlling some or all of Intel’s chip plants.
Q: What is the government’s stance on the potential deal?
A: The Trump administration might not support Intel’s US chip factories being operated by a foreign entity, citing a potential deal between TSMC and Intel.
Q: What is Intel’s current market valuation compared to TSMC’s?
A: TSMC’s market valuation is about eight times larger than Intel’s.
