Broadcom and TSMC explore Intel acquisition options

Broadcom and Taiwan Semiconductor Manufacturing Company (TSMC) are reportedly exploring preliminary deals to take over parts of Intel, according to The Wall Street Journal. Broadcom is considering acquiring Intel’s chip-design and marketing business, which includes its Core and Xeon CPUs for PCs and servers. The company is looking for a partner for Intel’s manufacturing business, known as Intel Foundry. Meanwhile, TSMC is assessing the possibility of controlling some or all of Intel’s chip plants, potentially in collaboration with an investor consortium.

Discussions between the parties are said to be informal and have not yet involved any proposals sent to Intel. Reports indicate that TSMC’s interest may be spurred by encouragement from President Donald Trump’s administration. However, a White House official noted that the administration would likely not support a scenario where a foreign entity controls Intel’s factories.

The report highlights Intel’s financial struggles, which have made it an attractive target for acquisition by competitors in the semiconductor industry. Qualcomm had previously approached Intel regarding a potential takeover in September. The Wall Street Journal added that Broadcom has informally discussed with its advisers making a bid for Intel’s chip design business only if another company agrees to acquire Intel Foundry.

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TSMC is reportedly focusing on Intel’s fabrication plants located in the United States. Several news sources, including The Wall Street Journal, Bloomberg, and The New York Times, mentioned that any potential deal could involve a consortium model that allows other chip designers to acquire stakes in Intel’s manufacturing operations. The New York Times also noted that a consortium could include private equity firms.

Intel’s interim executive chairman, Frank Yeary, has communicated with both the Trump administration and TSMC leaders about the prospective deal to separate Intel’s chip manufacturing and chip design businesses. Although the discussions may initially focus on Intel’s U.S. fabrication plants, the transaction might extend to its factories in other countries such as Ireland and Israel.

Intel has faced mounting financial challenges recently, culminating in an announced $10 billion cost-cutting plan last August that resulted in the loss of over 15,000 jobs. These difficulties, coupled with growing acquisition interest, have led to speculation regarding Intel’s potential reorganization into separate entities for its chip manufacturing and design operations.

During an investor conference in December, interim co-CEO David Zinsner acknowledged the possibility of a full separation, stating, “Does it ever fully separate? I think that’s an open question for another day.” Intel had already begun to distinctively segregate its chip manufacturing operation, Intel Foundry, from its design business, Intel Products. This effort includes establishing Intel Foundry as an independent subsidiary with its own operational board and enterprise resource planning system, a change Zinsner indicated is underway.

Featured image credit: Intel