Intel Becomes Potential Takeover Target Of Broadcom, TSMC: Reports

While U.S. infrastructure giant Broadcom is looking at buying Intel’s chip design business, Taiwanese chip foundry behemoth TSMC is considering acquiring some or all of Intel’s chip manufacturing business, according to multiple reports.

Intel has become a potential takeover target of U.S. infrastructure giant Broadcom and Taiwanese chip foundry behemoth TSMC, according to multiple reports.

The latest report, from The Wall Street Journal Saturday, said Broadcom has “informally discussed with its advisers making a bid” on Intel’s chip design business, which includes its Core and Xeon CPUs for PCs and servers, respectively.

However, Broadcom reportedly would only consider taking such an action if there was a deal in place for another company to buy Intel’s chip manufacturing business, Intel Foundry, according to the newspaper, which cited people familiar with the matter.

Separately, TSMC has “studied controlling some or all of Intel’s chip plants,” The Wall Street Journal said. Bloomberg reported on Friday that TSMC’s focus may be on Intel’s fabrication plants, or fabs for short, in the United States.

Intel, Broadcom and TSMC did not respond to requests for comment Sunday morning.

The Wall Street Journal, Bloomberg and The New York Times reported that this deal could be accomplished through a consortium model. This could involve other chip designers gaining a stake in Intel’s manufacturing business, according to Bloomberg. The New York Times said a consortium deal could also include private equity firms.

All three news publications reported that TSMC—which is Intel Foundry’s top competitor as a contract chipmaker with advanced capabilities—has sought the potential deal at the encouragement of the Trump administration.

However, a White House official told The Wall Street Journal and Bloomberg that President Trump would likely not support a foreign company owning Intel’s factories.

The New York Times reported Friday that Intel’s interim executive chairman, Frank Yeary, has spoken with the Trump administration and TSMC leaders about the deal, which would separate Intel’s chip manufacturing business from its chip design business.

While The New York Times said the deal would be limited to Intel’s U.S. fabs, it could also include the semiconductor giant’s factories in other countries, like Ireland and Israel.

Intel has been the source of acquisition rumors for several months in light of growing financial challenges that prompted the semiconductor giant last August to announce a $10 billion cost-cutting plan that resulted in the company slashing more than 15,000 jobs.

The chipmaker’s mounting challenges, combined with the rumored acquisition interest, have raised questions about whether Intel would consider breaking up its chip manufacturing and chip design businesses into separate companies.

At an investor conference in December, interim Intel co-CEO David Zinsner, who is also the company’s CFO, said the idea is a possibility: “Does it ever fully separate? I think that's an open question for another day.”

Even before acquisition rumors began to pop up, Intel had taken steps to internally separate its chip manufacturing business, Intel Foundry, from its chip design business, which is now known as Intel Products and led by Intel’s other interim co-CEO, Michelle Johnston Holthaus.

At the same investor conference two months ago, Zinsner referenced Intel’s move to turn Intel Foundry into an independent subsidiary, saying that the business was getting its own operational board and enterprise resource planning system.

“That's already in flight. That's going to happen, and it’s just a matter of time at this point that we lock in the milestones associated with creating that separation,” he said.