Division of development and production business Broadcom and TSMC Consider Splitting Intel’s Business

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Broadcom and TSMC are considering splitting and separately acquiring Intel’s business units, according to The Wall Street Journal and other sources. Broadcom is focused on acquiring Intel’s development and marketing division, while TSMC is evaluating a takeover of its foundry operations.

Taiwan Semiconductor Manufacturing Co. and Broadcom have been monitoring potential bids to split the struggling U.S. chip giant, according to The Wall Street Journal on Saturday. Broadcom had been particularly interested in acquiring the chip design and marketing division but sought a partner to take over manufacturing, ruling out a full acquisition of Intel. Previously, Qualcomm, Broadcom’s rival in the fabless chip market, had also explored acquiring Intel’s development business..

According to the same report in the Whale Oil Street Journal, Broadcom's plans are likely to include the world's largest contract manufacturer, TSMC, which is also considering a partial acquisition of the ailing chip manufacturer Intel, possibly as part of an investor consortium. As TSMC does not offer any independent chip products, it is primarily interested in the existing production facilities.

The Bloomberg news agency also reported last Friday that TSMC was considering a possible takeover of Intel's foundry business. Bloomberg also reported that US President Trump would not be uninterested in the Taiwanese contract manufacturer acquiring a majority stake in Intel's fab facilities.

The report emphasizes that there are no agreements between Broadcom and TSMC: All discussions on the matter to date have been separate and are at an informal, preliminary stage.

A question of national security?

It is questionable how the US government would view such a takeover in the current political climate. Although TSMC has recently started operating production facilities in Arizona, USA, its headquarters are in Taiwan. Although Broadcom officially operates in the USA, it was acquired by Avago Technologies from Singapore in 2016, which consequently took over both the company name and the American headquarters in San Jose.

According to the news agency Reuters, Intel's interim CEO Frank Yeary has held talks with potential buyers and representatives of the Trump administration who are concerned about the fate of the company. The US government classifies Intel and its headquarters as important for national security. However, Yeary has told people close to him that he is primarily focused on maximizing the company's stock market value for Intel shareholders. Such indications could speak for a planned sale or partial sale.

Reuters had already obtained a statement from the US government on Friday regarding the rumors that TSMC was interested in Intel's foundry business. A White House representative told the news agency that the Trump administration may not support Intel's US chip factories being run by a foreign company. The second Trump administration is encouraging foreign companies to invest and build in the USA. However, it is "unlikely" that it would support a foreign company in completely taking over Intel's production facilities. Neither Intel, Broadcom nor TSMC could be reached by Reuters or Bloomberg for further comment.(sg)