Investors go wild: Intel soars after shocking split rumors

Intel’s share price has had a reversal of fortunes in recent days registering a 38.5% gain, its best five-day showing in the company’s history. On Tuesday, the embattled chipmaker stock soared over 16% to close at $27.39.

The surge in the company’s value has come after the Wall Street Journal reported on Saturday that its rivals Broadcom and Taiwan Semiconductor Manufacturing (TSMC) are looking to make independent offers that would break up Intel. The ongoing talks are largely informal and in the preliminary stages, neither company has submitted a bid for the iconic American chipmaker.

However, according to the report, people familiar with the matter said that Broadcom is contemplating a deal for the company’s chip design and marketing segment. On the other hand, TSMC is considering a stake or complete control of Intel’s factories.

Why are investors going wild over the idea of Intel breaking up?

Intel has shed billions of dollars in market value over the past few years as it struggled to gain business for its beleaguered manufacturing division. in 2022 under the leadership of CEO Pat Gelsinger, who was ousted in December, pushed to open a foundry business to make chips for external customers in order to compete with TSMC but it has proved to be a loss-making enterprise.

The chipmaker has also failed to get a boost from the artificial intelligence boom that put wind in the sails of other semiconductor makers.

However, investors see value in splitting up the company’s product division, which is profitable, and its unprofitable foundry whose assets would be of value to investors. The combined value of the two separately could make a Intel split in two far more valuable than it is currently trading at.

Some analysts though caution that a deal between Intel and TSMC could face difficulties. Not only could it be “time-consuming and complicated,” said Vivek Arya of Bank of America, but it could also run into regulatory barriers over antitrust concerns from China and Europe.

Likewise, the Trump administration may not be keen on a Taiwanese firm gaining control of all of Intel’s US manufacturing facilities, the largest set in the nation.

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