Baird speculates that Intel Corporation (INTC.US) may spin off its wafer fab, with Taiwan Semiconductor Manufacturing Co., Ltd. sponsored ADRs possibly being involved.

Intel Corporation (INTC.US) was in the spotlight on Wednesday as investment firm Baird indicated that discussions about potentially spinning off its manufacturing division had been heard from the Asian supply chain, with Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) possibly being involved. Intel Corporation's stock price surged by as much as 7% in the late afternoon. As of the time of writing, the stock was up 0.53% in after-hours trading. Baird analyst Tristan Gerra wrote in a report to clients that the discussions involved Taiwan Semiconductor Manufacturing Co., Ltd. dispatching engineers to Intel Corporation's chip factories (planned for 3-nanometer and 2-nanometer sizes) to enhance technological capabilities and ensure the feasibility of Intel Corporation's chip factories and future manufacturing projects. Gerra has a "neutral" rating on Intel Corporation and added that the chip factories could be split into a new entity jointly owned by Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR and Intel Corporation, but operated by Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR. He also mentioned that the new entity would receive funding from the U.S. CHIPS Act. Gerra wrote in the report, "While the project has not been confirmed and could take a long time to materialize, we see this as a meaningful move to further solidify ex-Intel CEO's focus on the company's core competency - manufacturing." "Looking ahead, Intel Corporation will benefit from significant cash flow relief and will focus on future design and platform solutions, while a viable chip factory could eventually attract key non-chip companies to diversify into a geographically reliable manufacturing mode." Intel Corporation did not respond to a request for comment and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR declined to comment. Earlier this week, Vice President J.D. Vance stated that the most advanced artificial intelligence chips would be manufactured in the United States, leading to a significant increase in Intel Corporation's stock price.