Intel, once the American giant in the production of microchips, may be divided to sell part of its business, with such big players as Taiwan Semiconductor Manufacturing (TSMC) and Broadcom interested in this, reported the The Wall Street Journal.
Broadcom is exploring the possibility of acquiring Intel's chip development and marketing unit, according to people familiar with the matter. The company has informally discussed making an offer, but would likely only do so if it finds a partner to buy Intel's manufacturing business. Intel has not yet made a formal offer, and Broadcom could decide to abandon the plans.
Meanwhile, TSMC is exploring options to gain control of some or all of Intel's manufacturing capabilities. This could include forming a consortium of investors or other structures to complete the deal. Negotiations remain at an early stage, and TSMC is not cooperating with Broadcom on this potential acquisition.
Talks about a possible Intel split have begun as the company struggles to keep pace with TSMC and Samsung Electronics in producing cutting-edge chips. Intel also faces competition from Advanced Micro Devices (AMD) in the CPU segment and significant losses from untapped opportunities in the artificial intelligence boom, dominated by companies like NVIDIA.
Intel's market value has fallen significantly in recent years, losing ground to its former rivals. However, speculation about a possible partnership with TSMC led to a sharp rise in the company's shares last week.
The separation of Intel into separate development and manufacturing divisions is in line with industry trends toward specialization in one area. However, such a restructuring poses significant operational challenges. Intel's factories are designed primarily to manufacture its own chips, and retooling them to accommodate TSMC's advanced processes would require significant engineering investment.
Additionally, any deal involving TSMC would require U.S. government approval, given Intel's critical role in national security and its reliance on funding under the CHIPS Act, which has provided Intel with $7,9 billion to support new factories in Ohio, Arizona and other states. Regulatory requirements require Intel to retain a controlling stake in its factories if they are spun off into a separate entity.
A key challenge for TSMC could be potential restrictions on bringing engineers to work in the US due to the Trump administration's strict immigration policies. The majority of TSMC's workforce comes from Taiwan and other regions outside the US.
Intel has already taken a number of steps that some analysts see as preparation for a split. The company has begun reporting separately on its manufacturing operations and plans to spin them off into a separate subsidiary with its own board of directors. The structure is expected to attract additional investment, including from private investors.
After firing CEO Pat Gelsinger in December, Intel has been searching for a new leader capable of addressing the challenges facing the company for more than two months.
Intel's situation is reminiscent of Broadcom's attempt to acquire Qualcomm in 2017. The deal was then blocked by the Trump administration due to national security threats.
As Intel struggles to overcome its challenges, the company's future remains uncertain. With interest from TSMC and Broadcom, as well as attention from the U.S. government, the company is facing a pivotal moment that could reshape its structure and impact the entire semiconductor industry.
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