Intel, once the dominant force in the semiconductor industry, is facing an uncertain future as reports suggest Taiwan Semiconductor Manufacturing Company (TSMC) and Broadcom are separately considering deals that could divide the company into two.
The potential split would see TSMC taking control of Intel’s chip manufacturing plants, while Broadcom explores acquiring its chip design and marketing business.
This development comes at a turbulent time for Intel, which has struggled to maintain its market position against competitors like Nvidia and AMD.
Once a powerhouse in the chip industry, Intel now finds itself trailing far behind its rivals in terms of valuation and technological advancements.
Intel’s Leadership Crisis and Market Struggles
The company’s uncertain future is further complicated by the recent resignation of its CEO, Pat Gelsinger, in December 2024. Gelsinger’s departure followed internal disagreements and mounting pressure as Intel failed to keep up with the rapid growth of AI and data center chips from competitors.
In his absence, senior executives David Zinsner and Michelle Johnston Holthaus have stepped in to manage the company on an interim basis.
Intel’s financial struggles have also been a significant concern. The company reported a staggering $16.6 billion loss, and its stock has plummeted by over 60% since Gelsinger took over in 2021.
In response, Intel announced major cost-cutting measures in 2024, including laying off 15,000 employees as part of a $10 billion restructuring plan aimed at improving profitability.
Broadcom’s Interest in Intel’s Design Business
Broadcom, a key player in the semiconductor industry, has been evaluating Intel’s chip design and marketing business as a potential acquisition.
According to reports, Broadcom has informally discussed making a bid but would likely proceed only if it secures a partner to handle Intel’s manufacturing operations.
If such a deal were to go through, Broadcom would gain access to Intel’s long-standing expertise in processor design, potentially strengthening its position in the AI and data center markets. However, the complexity of such a transaction, along with regulatory scrutiny, poses significant hurdles.
TSMC’s Potential Takeover of Intel’s Factories
Simultaneously, TSMC, the world’s largest contract chipmaker, is considering acquiring Intel’s chip manufacturing plants.
This move aligns with TSMC’s long-term strategy of expanding its production capacity and could help the company solidify its position as the leader in advanced semiconductor manufacturing.
However, any deal involving TSMC taking control of Intel’s U.S.-based factories would likely face political and regulatory opposition. The U.S. government has been vocal about keeping domestic semiconductor production within American control, particularly following the passage of the CHIPS Act in 2022.
The legislation allocated $53 billion to boost domestic chip production, with Intel receiving the largest share—up to $7.9 billion. A key condition of this funding is that Intel must retain a majority stake in its factories if they are ever spun off into a separate entity.
The Biden administration is reportedly hesitant to approve any deal that would place Intel’s manufacturing capabilities under foreign ownership.
Given the strategic importance of semiconductors in defense, national security, and economic stability, any such transaction would be subject to intense scrutiny.
Operational and Technical Challenges
Beyond regulatory concerns, a potential split of Intel into separate design and manufacturing units would also present significant operational challenges.
Intel’s factories have primarily been designed to produce its own chips, and transitioning them to accommodate TSMC’s production methods would require extensive retooling and investment.
Furthermore, Intel has only recently started offering its foundry services to external customers, meaning its infrastructure is not yet optimized for third-party chip production. Any shift in operations would demand significant engineering expertise, time, and financial resources.
Intel’s Fight for Relevance
Despite these challenges, Intel has been making efforts to regain its footing. In December 2023, the company launched Gaudi3, an advanced AI chip designed to compete with offerings from Nvidia and AMD.
While this was seen as a step in the right direction, it remains to be seen whether Intel can leverage its AI initiatives to regain market dominance.
Additionally, Intel has been working on strengthening its foundry business, aiming to compete with TSMC and Samsung in the contract manufacturing space.
However, with TSMC already dominating the global chip production landscape, Intel faces an uphill battle in establishing itself as a major player in this field.
What’s Next for Intel?
While talks between Intel, Broadcom, and TSMC are still in the early stages, the possibility of Intel being split into two separate entities is no longer just speculation.
The outcome of these discussions will have far-reaching consequences for the semiconductor industry and the global tech landscape.
With regulatory hurdles, operational challenges, and political factors at play, the fate of Intel remains uncertain. However, one thing is clear—Intel’s golden era as a dominant force in the chip industry is under serious threat.
Whether the company can adapt, survive, or be forced into a historic breakup will be one of the most closely watched developments in the tech world in the coming months.
