Qualcomm Approaches Intel for Potential Acquisition

By Max A. Cherney
SAN FRANCISCO (Reuters) – Qualcomm has recently approached Intel (NASDAQ:INTC) to explore a potential acquisition of the troubled chipmaker, according to a source familiar with the situation. This deal could be transformational in the sector but faces numerous hurdles.

Qualcomm (NASDAQ:QCOM) CEO Cristiano Amon is personally involved in the negotiations to acquire Intel, a company with a five-decade legacy. Amon has been actively examining various options for a deal with Intel’s portfolio.

Earlier this month, Qualcomm showed interest in acquiring parts of Intel’s design business, particularly its PC design unit. However, the discussions are at an early stage, and Qualcomm has not made a formal offer.

Intel declined to comment on the matter, while Qualcomm did not immediately respond to a request for comments from Reuters.

Intel’s shares closed up by 3.3%, while Qualcomm saw a decrease of 2.9%.

This approach comes at a time of weakness for Intel, which has seen its shares drop nearly 60% this year. A deal would likely draw scrutiny from antitrust regulators in the U.S., China, and Europe. Qualcomm may need to divest portions of Intel to gain regulatory approvals.

If the deal goes through, it would be the largest takeover attempt in the tech industry since Broadcom’s attempt to acquire Qualcomm for $142 billion in 2018, which was blocked by President Trump due to national security concerns.

It remains uncertain how Qualcomm, which has a market value of $188 billion, would finance a bid for Intel, valued at $122 billion including its debt. Qualcomm currently holds about $13 billion in cash.

Qualcomm has never operated a chip factory and relies on companies like Taiwan Semiconductor Manufacturing Co for its chip production. This raises questions about managing Intel’s contract manufacturing business if an acquisition goes ahead.

Intel’s Challenges

Once a dominant player, Intel has lost its manufacturing edge to Taiwanese competitor TSMC. The company has struggled to capitalize on the generative AI boom embraced by Nvidia and AMD.

Intel has been working on restructuring its business, focusing on AI processors and a chip contract manufacturing business. In a recent memo from CEO Pat Gelsinger, Intel announced plans to downsize by cutting certain businesses and restructuring the company. This includes pausing factory construction in Poland and Germany and reaching a deal to create a custom networking chip for Amazon’s AWS.

The Wall Street Journal first reported Qualcomm’s discussions with Intel earlier on Friday.