MW Can Broadcom save Intel? What investors should know about the latest deal rumors.

By Emily Bary

Broadcom reportedly has some interest in Intel's design business.

Intel Corp.'s future has been a hot topic on Wall Street lately, and it's poised to stay that way into another week following a new report about possible deal activity.

This time, it's from the Wall Street Journal, which said that Broadcom Inc. $(AVGO)$ and Taiwan Semiconductor Manufacturing Co. Ltd. (TW:2330) $(TSM)$ are looking separately at deals for different parts of Intel's $(INTC)$ empire.

TSMC declined to comment. Representatives from Intel and Broadcom didn't immediately return MarketWatch's request for comment.

While there had already been speculation that TSMC was considering a move that would see it get more involved in Intel's fabrication business, the new component in the reporting is the idea that Broadcom may be interested in Intel's chip-design and marketing businesses.

See more: Intel has become a political pawn - but it may not need Trump or a deal with TSMC

Bernstein analyst Stacy Rasgon is intrigued. "We want Broadcom to stay away from the fabs, but would love to see what they could do with the products," he wrote in a Monday note to clients. Broadcom would likely be able to execute Intel's x86 central-processing-unit business better than what Intel has been showing recently, he noted.

Broadcom has a history of cutting costs and boosting prices after making acquisitions, Raymond James analyst Srini Pajjuri said in a report.

Intel shares have gained more than 20% so far in February, partly on excitement over the potential for a deal, as well as on general enthusiasm about the Trump administration's stated support for U.S. chipmaking. The stock is still down roughly 50% over a two-year span, reflecting Wall Street's pessimism about recent business trends as well as the overall composition of the company.

See also: Here's how Intel's stock charts look after its big rally. Should you buy it?

Intel is unlike many of its semiconductor peers in that the company not only designs chips but also manufactures them, and it has been trying to expand into making chips for others in the industry. The foundry push has been expensive, and Intel's manufacturing arm is still losing money.

Rasgon wrote that Intel's x86 CPU offerings "while under share and market pressure, are not necessarily bad businesses on their own if they can be stabilized." But he still thinks something has to give when it comes to the manufacturing unit.

"It seems impossible to spin the product groups without making sure the fabs are well-capitalized (whether kept or sold)," Rasgon continued. "Hence some of the recent newsflow around TSMC investments makes more sense, and while the WSJ article suggested Broadcom and TSMC are not working together some sort of cross-talk is probably going to be needed to get something done here."

He's bullish on Broadcom's stock regardless of whether a deal takes place, and he advocates for an all-stock deal since Broadcom shares represent "much more valuable currency than before." (They're up 87% over a one-year span.)

As for Intel's stock, Rasgon thinks things are more complicated. The stock has room to move higher if a deal takes place, but "a lot seems like it needs to happen to get there, with multiple moving parts involving executing a complex company split while simultaneously figuring out how to stabilize and/or possibly sell the fabs (which feels like a gating factor to get anything done)." Additionally, Intel would need "to commit to distributing the proceeds to shareholders instead of holding them," he wrote.

He's staying on the sidelines, as he reiterated a market-perform rating on Intel's stock in Monday's note.

Raymond James' Pajjuri also saw potential in a hypothetical deal with Broadcom but said that regulatory matters could be an issue. He also questioned whether it makes the most sense for TSMC to run or purchase Intel fabs.

The WSJ report, citing anonymous sources, said that TSMC "has studied controlling some or all of Intel's chip plants, potentially as part of an investor consortium or other structure."

"Assuming China approval is not an issue, we believe the scenario that presents the best outcome for most parties (if not all) is one where U.S. fabless companies take equity stake in Intel Foundry, commit some wafer volumes, and spin it off into a separate unit," wrote Pajjuri of Raymond James. "TSM can be a participant in such a deal, but a better outcome for [the] U.S. government would be to work with TSM separately to expand its U.S. manufacturing footprint."

-Emily Bary

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February 18, 2025 03:57 ET (08:57 GMT)

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