Intel could be split in two with Broadcom and TSMC as possible buyers

Intel has struggled to build fabs capable of producing chip technology to the latest processes

Rumours are mounting that Intel could be the target of a takeover that would see it broken up

According to the Wall Street Journal – citing “people familiar with the matter” – Taiwanese contract chip-making giant TSMC would acquire Intel’s manufacturing facilities, while Broadcom would scoop up its chip design and marketing side. The two companies, the report added, are not working together.

Such a deal, if approved by US authorities, would enable TSMC to expand its operations in the US, but might face opposition from the administration of newly elected president Trump, concerned about the ownership of a high-tech US company considered critical to US national security passing to a foreign entity.

However, the WSJ also asserted that the talks were at an early stage and it remains open to question why they would have been leaked.

Intel’s current interim executive chairman, Frank Yeary, according to Reuters, has been casting around for potential suitors for the company, looking to maximise value for shareholders rather than appoint an executive team capable of reinvigorating the somewhat moribund company.

Another theory is that investment banks are looking to put together a takeover deal of some description that would enable them to earn billions of dollars in fees.

Intel has struggled in recent years on several fronts.

Its decision almost two decades ago to focus on CPUs has become undone in recent years by increasingly competitive products from its rival AMD, which is now outclassing Intel in a number of sectors of the CPU market.

Moreover, Intel has always lagged in terms of the development of graphics technologies, preferring to integrate less powerful graphics into its CPUs rather than competing at the cutting edge of the market for graphics cards. As a result, Nvidia has benefited from the boom in demand for GPUs to power AI on servers in the datacentre, becoming the most highly valued company in the world as a result.

Like many chip makers, it has also struggled to build fabs capable of producing chip technology to the latest processes, compounding its problems with technical competitiveness.

This contributed to its failure to develop a contract-manufacturing business that could compete with TSMC and Samsung.

As a result, Intel lost its top spot as the world’s biggest chip maker by revenue last year as revenues stagnated, leading to the departure of CEO Pat Gelsinger in December last year.