Intel Explores Strategic Options

Reports over the weekend indicated that Intel (NASDAQ:INTC) is exploring strategic options to revitalize its business. Potential actions include scrapping certain factories, selling off assets, and possibly separating or spinning off its Foundry and product/design teams.

Analyst Insights

In a note to clients on Tuesday, analysts at JPMorgan evaluated the possible repercussions for Taiwan Semiconductor Manufacturing Company (TSMC).

JPMorgan suggested that the situation could result in a small positive impact for TSMC, although they acknowledged that Intel’s total addressable market for outsourcing has diminished compared to the rising opportunities in artificial intelligence semiconductors.

JPMorgan stated, “If we were to see further capex reductions or mothballing of new Fabs, this would imply slower progress in external Foundry.” They emphasized that leading-edge Foundry operations require scale, and such downsizing would benefit TSMC, especially as it expands geographically.

Additionally, JPMorgan indicated that splitting Intel into Foundry and Product design could likely favor TSMC. They noted that if Intel’s product division needs to enhance its competitiveness, it may have to outsource more computing products to TSMC.

JPMorgan concluded that they do not expect Intel’s Foundry arm to emerge as a serious competitor to TSMC in leading-edge processes within the next three to five years, even if it operates as an independent entity.