Intel Corporation (NASDAQ:INTC) reported a $19.2 billion net loss for the fiscal year 2024. For some time, it has been the target of a restructuring rumor mill. In September 2024, rumors centered on Qualcomm (NASDAQ:QCOM) potentially acquiring Intel’s core semiconductor design business.
Alongside Qualcomm, GlobalFoundries (NASDAQ:GFS) has also been in play as it was rumored that Elon Musk may be mediating the company taking over Intel. Most recently on Saturday, insider sources contacted The Wall Street Journal with another restructuring vector.
Broadcom and TSMC are Now in Play for an Intel Takeover?
Seemingly more substantial this time around, both Broadcom Inc (NASDAQ:AVGO) and Taiwan Semiconductor Manufacturing (NYSE:TSM) are exploring the break up of Intel. As the world’s top semiconductor manufacturer, TSMC is interested in Intel’s foundries, while Broadcom is interested in Intel’s chip design and marketing division.
This wouldn’t be the first time Broadcom concluded a massive merger, having completed VMware (NYSE:VMW) acquisition in November 2023 worth $61 billion. The move added cloud-based virtualization software stack on top of Broadcom’s data center, networking, wireless and broadband hardware solutions.
Even for Broadcom, acquiring Intel would be too large a bite of the semiconductor pie, so the company appears to seek a partner for Intel’s chip manufacturing division. This is where TSMC would come in, by placing Intel’s foundries under its wing, or at least a portion.
However, the WSJ article makes it seem as if this is in an early exploratory stage. As of yet, TSMC and Broadcom don’t appear to be collaborating. Rather, the reveal to WSJ seems to be a probing balloon to determine reaction before proceeding further.
Why Did Intel Stumble in the First Place?
Just as Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) dominate the software space, Intel has been dominating the semiconductor space since the early 1980s. In fact, Gordon Moore was one of the Intel co-founders, notable for now commonplace Moore’s Law. The empirical observation posits that the number of transistors in an integrated circuit double around every two years.
But along the way, Intel stumbled to implement Moore’s Law at scale against competitors like TSMC. In order to continue to pack more transistors per surface, the entire semiconductor industry is reliant on shrinking, so that performance-per-transistor uptick continues.
Intel suffered multiple delays with the deployment of the 10 nm node process, having moved the launch time frame from 2016 all the way up to 2019. By that time, TSMC was already deploying 7nm and getting ready for 5nm scaling.
Intel’s troubles compounded by going all in on DEI initiatives. Despite the recent anti-DEI purge across federal agencies, Intel’s official site still hosts the Global Diversity and Inclusion section. Moreover, in late 2024, SemiAnalysis reported that 7 out of 11 members of Intel’s board of directors have no relevant experience in the semiconductor sector.
Is Intel Breakup Likely?
After Pat Gelsinger exited the company as Intel CEO, the current Intel executive chairman is Frank D. Yeary. Interestingly, he is also one of the directors lacking semiconductor experience. Per WSJ sources, Yeary has been handling negotiations for Intel’s potential buyers such as TSMC and Broadcom, while also liaising with the White House.
To no one’s surprise, President Donald Trump doesn’t favor the idea of Intel going under TSMC, even though Taiwan itself is effectively a US protectorate. In fact, this gives USG leverage over Taiwan which appears to be working. During the last presidential campaign, Trump’s focus was on revitalizing and onshoring critical domestic industry, boosted by a new tariff regime.
Reuters had already reported that Trump is against such a move. Given that TSMC is the only semiconductor company large enough to properly absorb Intel, this puts the entire deal into question. Moreover, a move in this direction would likely disrupt the delicate rollout of Intel’s cutting edge 18A node process.
As previously explored in-depth, the Intel 18A this year is pivotal for the company’s comeback, coupled with the well-received Arc line of discrete GPUs aimed at the mid-budget market. Against TSMC’s take on the most advanced 2nm platform, Intel’s 1.8nm appears to be superior according to TechInsights report:
“In terms of performance, we believe Intel 18A is the leader.”
What Is Intel’s Budget Runway?
Following the Q4 2024 earnings report in late January 2025, Intel has $7.1 billion in cash reserves, down from $11.1 billion a year ago. Intel’s core business model, the Client Computing Group (CCG) segment, generated $30.3 billion for FY2024, up year-over-year by 4%. Unfortunately, this segment’s revenue suffered a Q4 drop of 9%.
Of all other Intel’s divisions, the Data Center and AI (DCAI) segment was the only one to avoid annual revenue decrease, but only at an uptick of 1% at $12.8 billion for the entire year. The Intel Foundry division continued to rack up losses, having decreased its annual revenue by 7% to $17.5 billion. And just like with CCG, this division too suffered a significant Q4 loss, going down 13%.
Intel’s restructuring efforts yielded a 23% cut to marketing and admin for the quarter. For the full year, however, this barely nudged expenditures at $5.5 billion vs $5.6 billion in 2023. Intel’s all-important R&D expenditures remained flat at around $3.9 billion from the year-ago quarter.
Lastly, Intel is yet to fully utilize its $7.86 billion direct funding package from the CHIPS and Science Act.
The Bottom Line
As a national strategic asset critical for the domestic semiconductor sector, the Intel Corporation (NASDAQ:INTC) will be approached with extra caution when it comes to any acquisition moves. It is more likely that Intel’s personnel/culture problem will be addressed first before more drastic measures take place.
After the announcement that the CEO of GlobalFoundries will step down on April 28th, the rumor mill pointed to Dr. Thomas Caulfield as the possible replacement for Pat Gelsinger. Caulfield spent the bulk of his career at IBM (NYSE:IBM) Microelectronics, only to move to GF as general manager in the mid-2000s, having led the company for the last seven years.
Although Caulfield may seem like a good candidate for Intel CEO, he will continue to serve GF as an executive chairman. This makes Caulfield’s appointment less likely as Intel requires a full hands-on-deck approach.
At press time, INTC stock is up 27.9% year-to-date, but still down over a one year period by 41%, priced at $25.88 per share. The current INTC price level is above the WSJ’s average price target of $22.42 per share.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.