Broadcom considering Intel takeover, potentially hijacking TSMC deal

Intel’s golden era seems to have ended, and now, its rivals Taiwan Semiconductor Manufacturing Co. (TSMC) and Broadcom are circling the company’s carcass, both eyeing potential deals that would essentially split the U.S. chipmaking icon in two. 

TSMC is considering taking over and operating some or all of Intel’s US factories, a proposal initiated by a member of the Trump administration to alleviate Intel’s financial struggles. 

Broadcom has also been closely monitoring Intel’s chip design and marketing business. According to reports, the company had discussed a potential bid with its advisers, but it needs a partner for Intel’s manufacturing business to progress its plans. 

Intel’s fate critical to national security 

While Broadcom and TSMC have both expressed interest in Intel, they are not working together, and all the talks up until now have been preliminary and largely informal, according to reports. 

Intel’s interim executive chairman, Frank Yeary, has taken the lead on the discussions happening between possible suitors and Trump administration officials, who are closely monitoring the situation. The administration is invested in the fate of Intel, an industrial giant considered a critical asset to national security. 

Yeary has reportedly been telling individuals close to him that his priority is to maximize value for Intel shareholders. On Friday, a White House official told Reuters that President Donald Trump’s administration might not get behind Intel’s U.S. chip factories falling into a foreign entity’s hands after reports that TSMC was considering a controlling stake in Intel’s factories at Trump’s request.

According to the White House official, while Trump’s administration supports foreign companies investing and building in the U.S., it is “unlikely” it will support a foreign firm operating Intel’s factories.

After all, the U.S. government has spent billions to shore up its own chipmaking capabilities, and giving TSMC control of Intel’s plants could be perceived as undermining that effort. 

Lawmakers concerned about national security could argue, and rightly so, that critical semiconductor production should not be allowed to be run by foreign entities. 

There is also the fact that TSMC is based in Taiwan, a flashpoint in the U.S.-China tensions. If Taiwan’s top chipmaker deepens its relationship with America, Beijing could see it as an escalation in the war for technological dominance, which may cause increased pressure on the already fragile global supply chain. 

Intel’s struggle to stay afloat

Intel is one of the few chipmakers that design and manufacture semiconductors. It was among the largest beneficiaries of the U.S. push to onshore critical chip manufacturing led by former President Joe Biden’s administration.

However, despite being a government favorite, Intel has struggled to keep up with rivals like TSMC and Samsung. 

The company had an ambitious plan to regain its dominance led by former CEO Pat Gelsinger, but the initiative failed to attract enough customers, leading the chipmaker to cancel contracts. Gelsinger was also eventually dismissed. 

Intel’s shares fell by about 60% as Gelsinger’s capital-intensive bid to bolster manufacturing strained the company’s cash flow and ultimately led to it downsizing its workforce by about 15%. 

The chipmaker has received billions in government subsidies, but its massive investment in new U.S. plants has yet to pay off, and its stock price reflects how investors feel.

If TSMC, now the world’s most advanced contract chipmaker supplying giants like Apple, Nvidia, and AMD, takes over Intel’s plants, it could bring its technological expertise and supply chain efficiency to factories struggling to compete in the sector. 

While the move will save Intel by easing financial pressure, offloading underperforming assets, and allowing the company to focus on chip design, it would be an admission of defeat for the company. 

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