Intel Shares Pop on News that Iconic Chipmaker Could Be Split Up

Breaking up is hard to do, if you’re Neal Sedaka. If you’re a company that dominated the high-end microprocessor business for nearly four decades, a breakup may be hard to swallow even if it’s the right thing to do. 

Shares in the embattled chipmaker Intel soared 16% on Tuesday, after reports that US rival Broadcom and Taiwanese rival Taiwan Semiconductor Manufacturing Company (TSMC) are weighing bids that would split up the iconic firm.

Intel-ligence Failure

As recently as the early 2000s, Intel’s market share was as high as 80%. But it’s been hobbled by all kinds of manufacturing woes and a bunch of really bad decisions, including blowing off Steve Jobs’ offer to make chips for the iPhone, rejecting a chance to buy a stake in OpenAI, and in a historic what-if, choosing not to pursue purchasing a little-known upstart called Nvidia.

In recent years, it has fallen behind on innovation, with competitors focused on AI lapping Intel in terms of growth. Nvidia, of course, became the star of the AI market with its chip designs, while other chipmakers like Advanced Micro Devices (AMD) ate into Intel’s market share. In August 2024, the slow erosion came to a head: Intel said it would cut 15,000 jobs, or 15% of its workforce, after announcing a $1.6 billion second-quarter loss.

The board subsequently ousted CEO Pat Gelsinger in December — a headhunt is still underway, so polish your résumé — and, late last month, Intel reported declining revenue for the third straight quarter and issued disappointing quarterly guidance. Shares are also down 37% in the past 12 months, so there has been little good news for a long time. Which is why the circling acquisition vultures put a smile on investors’ faces:

• The Wall Street Journal reported over the long weekend that Broadcom is eyeing Intel’s chip design and marketing business. The company would only make an offer, the WSJ reported, if another partner agreed to take on Intel’s manufacturing business.
• What a coincidence: Bloomberg reported last week that TSMC is contemplating taking a controlling stake in Intel’s chip factories, apparently at the behest of the Trump administration. The proposal, which TSMC was said to be open to, would also involve some US chip designers taking equity stakes in the plants. Despite its fall, Intel won $7.9 billion in US government funding last year for projects to build out its chipmaking capacity.

To be clear, we’re pretty certain that it is an actual  coincidence, and that Broadcom and TSMC are not working together. But their moves could benefit each other.

Virtuous Vice: Vice President JD Vance gave Intel and other American tech firms some cover last week when he told an AI conference in Paris that more AI chips will be made on US soil and that the administration will work to keep AI technologies from foreign adversaries. Intel, meanwhile, could use some protection from its own recent history.