Chipmaking giants Broadcom Inc. and Taiwan Semiconductor Manufacturing Co. are reportedly mulling deals that would ultimately see their rival Intel Corp. carved up into two separate entities.
The Wall Street Journal reported this weekend that Broadcom is looking closely into the potential of acquiring Intel’s chip design business, while TSMC is alleged to be keen on buying either some or all the company’s chipmaking factories.
The report, which cites people conversant in the matter in each cases, notes that Broadcom and TSMC will not be working together, and nothing has been agreed so far. Actually, the talks are still at a really informal stage, the Journal noted. But in the event that they proceed, they may ultimately result in the breakup of Intel, whose dominance of the chipmaking industry was once so complete that such a move would have been unthinkable even a couple of years ago.
Intel’s interim Executive Chairman Frank Yeary has reportedly been holding talks with each suitors and officials from the Trump administration, who’re apprehensive in regards to the fate of an organization that continues to be viewed as critical to U.S. national security. Yeary has reportedly said his primary focus is to maximise value for Intel’s shareholders.
Intel’s fall from grace began when it fell behind TSMC, which dominates advanced process nodes. That left the corporate vulnerable to rivals resembling Advanced Micro Devices Inc., which outsource their chip production to TSMC, and it has struggled to compete lately, losing significant market share in key segments resembling personal computers and data center servers.
In December, Intel’s longtime Chief Executive Pat Gelsinger was ousted by the corporate’s board of directors after failing to see through an ambitious turnaround plan that saw it separate its chip manufacturing business from the remaining of the corporate.
The talks with TSMC regarding Intel’s factories, which now run as a separate business, are still within the exploratory phase, the Journal said. Trump officials have reportedly asked TSMC to explore an acquisition.
Nevertheless, a White House official told the Journal that President Trump is unlikely to support any deal that may leave a foreign entity operating Intel’s factories, that are considered strategic assets.
Intel began separating its factory operations from its primary chip design business in late 2022, in a move which suggests it treats orders from Intel’s design teams as the identical as those from third-party customers. Last 12 months, it began reporting its factory’s financial results individually, and plans to spin them off as a separate subsidiary with its own board of directors.
Intel’s interim co-CEO David Zinsner said in an interview with the Journal last month that the brand new structure would make it easier for the corporate to hunt outside investment within the factory, which is seen as key to advancing its manufacturing capabilities because it strives to meet up with TSMC.
Any deal to dump Intel’s factories would require authorization from the U.S. government under the CHIPS Act of 2022. Under the act, Intel was awarded $7.9 billion in funding to support the development of latest factories in Arizona and Ohio, as a part of the federal government’s bid to spice up its domestic chipmaking industry and reduce its reliance on foreign entities. With that deal, Intel is required to keep up majority ownership of its factories.
If TSMC were to amass Intel’s factories, it will need to perform some major retooling work so as to set them up to fabricate its most advanced chips, and people efforts may very well be complicated by the Trump administration’s stance on immigration. That’s because a lot of TSMC’s best engineers come from Taiwan and other non-U.S. countries.
Intel has already shed quite a few parts of its business lately, including spinning off its Mobileye automotive chip business as a separate entity. It’s also within the strategy of offloading its programmable-chip division Altera, which had been acquired for $16.7 billion in 2015, in addition to its enterprise capital arm, Intel Capital.
Speculation over Intel’s future has intensified since Gelsinger’s ousting, with other suitors reportedly including Qualcomm Inc., though that company’s interest has reportedly cooled. Broadcom CEO Hock Tan told the Financial Times in an interview in December that he has little interest in buying parts of Intel, as he’s more concerned about pivoting towards specialist artificial intelligence chips.
Within the meantime, Intel continues its seek for a everlasting successor to Gelsinger. The corporate has reportedly hired the recruitment specialist Spencer Stuart to conduct the search on its behalf, but there’s no word yet on when a successor shall be named.
Photo: Thomas Cloer/Flickr
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