Intel Faces Potential Breakup as Broadcom and TSMC Explore Deals

Intel, a dominant force in the U.S. semiconductor industry, is reportedly being considered for a major restructuring, with both Taiwan Semiconductor Manufacturing Company (TSMC) and Broadcom exploring potential deals to split the company, according to The Wall Street Journal.

Sources familiar with the discussions indicate that Broadcom has shown significant interest in Intel’s chip design and marketing operations. The company has reportedly been in talks with advisers about a possible acquisition, though any formal move would depend on finding a partner for Intel’s manufacturing division. Broadcom, known for its role in connectivity solutions, is apparently evaluating the feasibility of such a deal, but it is not currently committed to pursuing it independently.

Meanwhile, TSMC, the largest contract chipmaker globally, is also examining the possibility of taking control of some or all of Intel’s manufacturing facilities. The Wall Street Journal suggests that TSMC may explore this move as part of an investor consortium or through other strategic arrangements. While both companies have explored these options, there is no indication that they are collaborating on the matter at this time.

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Intel’s interim executive chairman, Frank Yeary, is at the helm of these negotiations. Sources reveal that Yeary is primarily focused on optimizing value for Intel’s shareholders. In addition to his conversations with potential buyers, Yeary has been engaging with officials from the Trump administration, who are reportedly concerned about the implications of Intel’s future, given its importance to national security.

In a related development, a White House official expressed reservations about foreign companies controlling U.S. semiconductor manufacturing operations, particularly in light of Intel’s crucial role. Reuters reported that President Donald Trump’s administration is unlikely to support a foreign firm taking over Intel’s U.S.-based factories, despite TSMC’s interest. While TSMC has been receptive to discussions, the official emphasized that the U.S. government prefers foreign investment and development of chip production within the country but does not favor foreign control over Intel’s domestic manufacturing plants.

The potential breakup of Intel also comes amidst significant political backing for the U.S. semiconductor industry. Intel, which was among the key beneficiaries of the Biden administration’s efforts to bring semiconductor manufacturing back to the U.S., secured a $7.86 billion government subsidy from the U.S. Commerce Department in November 2024. The move aligns with the broader push to ensure that vital technology remains within the nation’s borders.

As these discussions unfold, the market dynamics are being shaped by Intel’s competition with companies like AMD and Nvidia. TSMC, with a market valuation significantly higher than Intel’s, continues to lead the charge in AI chips and other advanced semiconductor technologies, raising questions about Intel’s ability to maintain its competitive edge.

Source: Reuters