Once a dominant force in the semiconductor industry, Intel now finds itself at a historic crossroads. Multiple investors are circling its core businesses, with TSMC, Broadcom, and private equity giant Silver Lake emerging as potential buyers. Market speculation even suggests that Intel might be split into two separate entities—one for chip design and the other for manufacturing. These acquisition rumors have sent Intel’s stock price soaring by 43% over just six trading days, with its market cap potentially exceeding $200 billion. Yet, behind this capital frenzy lies a deeper story of Intel’s struggles and the evolving dynamics of the global semiconductor landscape.

From Market Leader to Industry Laggard: How Did Intel Get Here?

Founded in 1968 by Gordon Moore and Robert Noyce, and later led by Andrew Grove, Intel became synonymous with innovation in computing. By the 1990s, its partnership with Microsoft—forming the “Wintel” alliance—gave it a commanding presence in the PC market, where it controlled over 90% of the x86 processor segment. However, as the 21st century unfolded, Intel repeatedly missed critical opportunities, leading to a steady decline in its dominance.

The first major misstep came during the mobile internet revolution. In 2006, Intel declined Apple’s request to develop a custom iPhone chip, paving the way for ARM-based processors to dominate the smartphone market. Today, over 95% of smartphones rely on ARM-based designs, effectively excluding Intel from this lucrative sector.

Intel’s next blunder was in artificial intelligence (AI) computing. The company shut down its discrete graphics card business in 1999, missing out on the GPU boom. Meanwhile, NVIDIA leveraged parallel processing technology to establish itself as the leader in AI computing. In 2018, Intel further compounded its errors by rejecting a partnership with OpenAI, failing to position itself in the rapidly growing AI training chip market. As a result, it now lags behind NVIDIA and AMD in data center and AI processor segments.

Moreover, Intel’s insistence on a vertically integrated IDM (Integrated Device Manufacturer) model has weighed heavily on its performance. Since 2015, Intel has repeatedly delayed mass production of its 10nm and 7nm process nodes, ceding market share to AMD. Meanwhile, TSMC and Samsung advanced to 3nm production and are already planning for 2nm. Intel’s foundry business has also been a financial drain, with a staggering $5.3 billion loss in the first half of 2024, forcing it to spin off the division in search of external investment.

Internally, governance issues have exacerbated Intel’s struggles. With only one semiconductor expert on its 11-member board, strategic decision-making has been slow and ineffective. This mismanagement has hindered innovation and compounded Intel’s competitive disadvantages.

The Intel Acquisition Frenzy: Who’s Eyeing Its Core Assets?

Amid ongoing financial troubles, Intel has turned to asset sales and restructuring, attracting significant interest from multiple industry giants and private investors.

1. Silver Lake’s Bid for Altera

According to Bloomberg, private equity firm Silver Lake is in exclusive talks with Intel to acquire a majority stake in Altera, its programmable logic device (PLD) division. While the exact transaction value remains undisclosed, the deal is expected to inject billions into Intel, aiding cost reduction and capital optimization.

Intel originally acquired Altera in 2015 for $17 billion, aiming to expand its FPGA (Field Programmable Gate Array) business. However, the division has underperformed expectations. Last year, Intel announced plans to partially divest Altera, seeking strategic partners to enhance its value. Silver Lake, known for its successful tech investments—including the privatization of Dell—is now seen as a potential savior for the struggling unit.

2. TSMC’s Bid for Intel’s Manufacturing Business

Reports suggest that TSMC is exploring a joint venture with Intel, potentially assuming control over some of Intel’s U.S. chip manufacturing plants. This move would serve several strategic purposes:

Access to U.S. Government Subsidies: Intel has received $7.9 billion in funding under the CHIPS Act. TSMC’s involvement could help it secure a share of these subsidies while offsetting facility upgrade costs.

Reducing Geopolitical Risks: Expanding U.S.-based production would mitigate TSMC’s reliance on its Taiwan facilities, addressing supply chain vulnerabilities.

Leveraging Intel’s Advanced Process Technologies: Intel’s 18A process node and PowerVia backside power delivery (BPD) technology could accelerate TSMC’s progress toward 2nm production.

Despite these advantages, political hurdles remain. The Trump administration has explicitly opposed foreign entities controlling Intel’s manufacturing assets, making TSMC’s involvement a contentious issue.

3. Broadcom’s Interest in Intel’s Chip Design Business

Broadcom is reportedly considering acquiring Intel’s chip design and marketing division. Over the past decade, Broadcom has aggressively expanded through acquisitions, particularly in networking chips and AI accelerators. If successful, this deal would strengthen Broadcom’s foothold in data centers and AI computing, positioning it as a formidable competitor to NVIDIA.

Broadcom CEO Hock Tan is known for his strategic asset restructuring. Following the VMware acquisition, he quickly divested non-core businesses to streamline operations. Analysts predict a similar approach if Broadcom acquires Intel’s design unit—focusing on high-margin AI and data center processors while offloading less profitable segments.

Can Intel’s Breakup Lead to Revival?

Market analysts are divided on the long-term impact of Intel’s restructuring. Evercore analyst Mark Lipacis estimates that a successful breakup could boost Intel’s valuation to $237 billion ($54.18 per share), significantly higher than its current stock price of approximately $27. However, regulatory challenges loom large.

Intel’s factories are primarily optimized for x86 processor production. Transitioning them into a contract manufacturing model would require substantial investment, raising questions about the feasibility of such a shift. Additionally, TSMC and Broadcom’s potential acquisitions may face scrutiny from U.S. regulators, given national security and antitrust concerns.

Intel’s acquisition saga reflects broader shifts in the semiconductor industry—from technology competition to a complex interplay of capital, geopolitics, and corporate restructuring. The company’s past missteps have led to its current predicament, and its future hinges on the outcome of these ongoing negotiations. Whether it emerges as a revitalized powerhouse or continues its decline remains to be seen. One thing is certain: Intel’s next move will reshape the semiconductor landscape for years to come.