Baird speculates that Intel's (INTC.US) fab split may involve TSMC.

Intel (INTC.US) was in the spotlight on Wednesday after investment firm Baird said it had heard discussions from its Asian supply chain about a potential spinoff of its foundry business, with TSMC (TSM.US) possibly involved. Shares of Intel surged as much as 7% in the closing hours of trading. As of writing, the stock traded 0.53% higher in the after-hours session. Baird analyst Tristan Gerra wrote in a note to clients that the discussions involved TSMC sending engineers to Intel's fabs (planned to produce 3nm and 2nm sizes) to enhance the technology level and ensure the viability of Intel's fabs and subsequent manufacturing projects. Gerra rates Intel "Neutral" and adds that the fab could be spun off into a new entity co-owned by TSMC and Intel but operated by TSMC, which would receive funding from the U.S. Chips Act. Gerra wrote in the report: "While this project is not confirmed and may take a long time to complete, we believe it is meaningful to further solidify Intel's former CEO's focus on the company's core competitiveness - manufacturing. Looking forward, Intel will benefit from significant cash flow relief and will focus on future design and platform solutions, and a viable fab may eventually attract key fabless companies to diversify into a geographically reliable manufacturing model." Intel did not respond to a request for comment. TSMC declined to comment. Earlier in the week, Vice President J.D. Vance said that the most advanced AI chips would be manufactured in the U.S., leading to a significant jump in Intel's stock price.