If the new CEO pursues a more extensive shake-up, Intel may reconsider the following deal ideas:
1. Division of factory department and product department
This includes completely separating Intel’s factory operations from its more profitable product development division. Under Mr. Gelsinger, the company has expanded its manufacturing operations into a foundry that makes components for external customers. Ultimately, it aims to compete with Taiwan Semiconductor Manufacturing Co., Ltd., which pioneered the foundry approach.
But Intel has announced only a few major customers for its foundry business, and high-end chip production isn’t large enough to make the effort profitable. To make matters worse, sales are declining, which is an ominous sign for companies expanding into large new industry segments.
Intel may be able to find the right people for its product division, but selling the foundry business will be difficult. GlobalFoundries Inc. is the largest chip foundry in the United States, but it is also facing its own struggles. That company doesn’t have the money or experience to run the type of manufacturing that Intel’s factories were built on.
It’s also unclear whether Intel’s new CEO, or the rest of the board, is ready to break up the company that once dominated the chip industry. And the move will complicate Intel’s ability to obtain $7.9 billion in federal grants under the American Chip and Science Act, which is aimed at reinvigorating domestic chip production.
A representative for Santa Clara, California-based Intel declined to comment.
2. Seduce suitors like Qualcomm
Bloomberg reported that Qualcomm had been considering acquiring Intel, but that interest had waned as of last week. The complexities associated with acquiring all of Intel made the deal less attractive, people familiar with the matter said at the time.
However, Qualcomm may consider acquiring parts of Intel, including its product business. Like much of the chip industry, Qualcomm doesn’t manufacture its own semiconductors. Instead, it relies on partners like TSMC to design the chips and produce them. That’s why it is unlikely that Intel will want to operate the factory.
Broadcom had previously considered pursuing a partnership with Intel, but the talks failed, Bloomberg reported in September. That same month, Broadcom CEO Hock Tan said the company was fully committed to acquiring VMware when asked if the company might explore a chip acquisition.
Large chip mergers also face regulatory hurdles around the world, something both Qualcomm and Broadcom are well aware of. Broadcom abandoned its attempt to acquire Qualcomm after the deal was blocked by President Donald Trump in 2018.
