Broadcom Eyes Potential $101 Billion Acquisition of Intel’s x86 Business in Game-Changing Semiconductor Deal
Broadcom (NASDAQ: AVGO) could be on the verge of making one of the most significant acquisitions in semiconductor history by potentially acquiring Intel’s (NASDAQ: INTC) x86 products business. According to analysts at Piper Sandler, this deal could be “extremely lucrative,” potentially transforming Broadcom’s earnings profile while strengthening its foothold in the semiconductor market.
A Highly Profitable Opportunity for Broadcom
Piper Sandler’s analysis suggests that Intel’s x86 business—comprising client computing (CCG) and data center and AI (DCAI) segments—could generate approximately $15 billion in annual operating income. If Broadcom applies its proven strategy of turning around acquisitions, this move could significantly enhance shareholder value.
The investment bank estimates that Broadcom could pay around $101 billion for Intel’s x86 division. Despite this hefty price tag, Piper Sandler views the Debt/EBITDA ratio of ~3.47x for the combined company as manageable, particularly within the semiconductor industry.
Broadcom’s Strategic Focus on Market-Leading Businesses
Broadcom CEO Hock Tan has built a reputation for executing high-profile semiconductor acquisitions that deliver strong returns. With Intel currently holding a 70% share of the client CPU market for desktops and laptops and a dominant position in server CPUs (50% in cloud and 75% in enterprise), Broadcom would gain significant leverage in the industry.
However, Intel has been gradually losing server market share to AMD (NASDAQ: AMD), making this the perfect opportunity for Broadcom to revamp and optimize the business. Analysts believe Broadcom may sell off any non-core segments that do not align with its strategic vision.
Financial Outlook: A $1.50 to $1.60 EPS Boost for Broadcom
Piper Sandler projects that acquiring Intel’s x86 business could add $1.50 to $1.60 in earnings per share (EPS) to Broadcom. Over the long term, the firm anticipates 5%-10% growth in both the client and server markets, making this a highly attractive prospect.
Furthermore, Broadcom could finance the entire transaction through debt and still maintain a reasonable leverage level of 3.5x Debt/EBITDA post-financing, assuming a 6% interest rate. Analysts also suggest that this figure could be even lower if the U.S. government gets involved in financing support.
Broadcom’s Stock Outlook Following the Potential Deal
Piper Sandler reiterated its Overweight rating on Broadcom, setting a price target of $250. With Broadcom’s track record of unlocking value through strategic acquisitions, the potential purchase of Intel’s x86 division could be a game-changer, solidifying its position in the semiconductor industry and boosting investor confidence.
If Broadcom proceeds with this acquisition, it could reshape the competitive landscape of the CPU market while delivering strong financial gains for shareholders. Investors will be closely monitoring any developments surrounding this potential megadeal.
