Shares in Intel (INTC) rocketed 10% higher today as investors got excited about a double acquisition from Broadcom Inc (AVGO) and Taiwan Semiconductor Manufacturing Co (TSM).
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Deals Could be Done
As first reported by the Wall Street Journal earlier this week, Broadcom and TSMC are in talks to divide the U.S. tech giant into two distinct entities. Broadcom is believed to be keen on acquiring Intel’s chip design services, while TSMC likes the look of its manufacturing facilities. Intel’s share price surge is an indicator that investors believe a deal could be done., although both Broadcom and TSMC were down today. Adding to that are the recent comments from U.S. Vice President JD Vance who said he wants AI chips to be produced domestically. Intel’s own struggles – its share price has short-circuited 41% over the last 12 months – such as falling behind TSMC in advanced chip production and ousting CEO Pat Gelsinger in December also makes it vulnerable to prying eyes.
Qualcomm (QCOM) reportedly made an informal bid approach last autumn, when private equity group Apollo proposed a multi-billion-dollar cash investment, and Arm Holdings (ARM) is said to have made an offer to buy Intel’s products group that specialized in designing silicon chips for PCs and servers.
Vultures Sense “Weak” Intel
“Intel is wounded and performing badly. It has frittered away billions of dollars in cash on share buybacks and not paid enough attention to product engineering, thereby weakening its competitive position,” said Dan Coatsworth, investment analyst at AJ Bell. “The apparent failure of Intel’s turnaround plan means it is no surprise that vultures are starting to circle. There is no way that Broadcom would want to buy all of Intel, given its fabless model, although it may be interested in the chip design units. TSMC is building a third fab in Arizona, to both diversify its geographic base and potentially get around tariffs. Acquiring further US-based sites could accelerate the process.”
Is INTC a Good Stock to Buy?
On TipRanks, INTC has a Hold consensus based on 1 Buy, 27 Hold and 5 Sell ratings. Its highest price target is $34. INTC stock’s consensus price target is $22.40 implying an 14.27% downside.
