3 Reasons Why Intel Is an Acquisition Target

Stock Valuation - Intel's stock price surged over 9% on Jan 17 following reports of a potential acquisition interest [1] - The stock's price-to-book ratio is just over 0.9, indicating potential undervaluation compared to the S&P 500 average of over 5x book value [2][3][4] - The company could theoretically increase in value by 8% through liquidation based on its current book value [3] Foundry Business - Intel operates more foundries in the US than any other company [5] - US share of global chip production has declined from 40% in 1990 to 12% in 2020 [5] - The CHIPS Act allocates $53 billion to domestic chip production, potentially benefiting Intel [5] - Intel's planned investments in advanced foundries could position it as a top global chip producer [6] Semiconductor Market Position - Intel generated$36 billion in product revenue in the first nine months of 2024 [8] - Excluding foundry business, Intel still maintains significant industry presence with $23 billion in revenue [8] - The company remains competitive in less technically advanced chips, which represent a substantial market segment [7][9] - TSMC derived 26% of its Q4 2024 revenue from chips larger than 7 nanometers, indicating continued demand for older chip designs [9] Acquisition Potential - Intel's current valuation and industry position make it an attractive acquisition target [10][11] - While unlikely to regain industry leadership, the company's undervaluation and revenue generation capacity present potential value [11] - Political and industry factors could enhance Intel's foundry business over time [11]