Multiple media outlets have learned from informed sources that Qualcomm has recently been in talks with the struggling chip manufacturer Intel regarding a possible acquisition. This potential deal could be a transformative transaction in the industry but is likely to face numerous obstacles.
Reports from Reuters, CNBC, and The Wall Street Journal have all covered this news.
According to sources on Friday, Qualcomm’s CEO Cristiano Amon personally participated in the negotiations to acquire Intel, a company with a 50-year history. Another source stated that Amon has been actively exploring various options for this deal.
Intel’s stock rose by 3.3%, while Qualcomm’s declined by 2.9%.
The discussions with Intel are still in the early stages. A third source revealed that Qualcomm has not yet made a formal offer to Intel. Intel declined to comment on the matter, and Qualcomm did not immediately respond to Reuters’ request for comment.
In an earlier report this month, Qualcomm was said to be exploring the possibility of acquiring parts of Intel’s design business, with particular interest in the company’s personal computer design division. Senior Qualcomm executives are reviewing Intel’s entire business portfolio.
Intel was once the world’s most valuable chip manufacturer, but since the beginning of this year, its stock price has dropped by nearly 60%.
If the transaction proceeds, it is likely to draw scrutiny from antitrust regulatory agencies in the US, China, and Europe. To obtain approval from regulatory authorities, Qualcomm may be required to divest parts of Intel’s business.
Since Broadcom’s attempted acquisition of Qualcomm for $142 billion in 2018 (which was blocked by then-US President Trump citing national security risks), this acquisition would be the largest acquisition attempt in the tech industry.
Reuters cannot confirm how Qualcomm, a company with a market value of $188 billion, would fund the acquisition of Intel, valued at $122 billion (including Intel’s debt).
Based on recent company filings, Qualcomm has approximately $13 billion in cash.
It is currently unclear how Qualcomm would handle the acquisition of Intel’s contract manufacturing business. Intel has invested billions of dollars over decades in manufacturing processes to produce chips with atomic-level precision, employing tens of thousands of engineers for this purpose.
Qualcomm has never operated chip factories or fabs and currently contracts with companies like Taiwan Semiconductor Manufacturing Co to manufacture chips, utilizing designs and other technologies provided by Arm Holdings.
The Wall Street Journal mentioned that three years ago, Intel’s market value was more than double its current value, and CEO Pat Gelsinger has been seeking acquisition opportunities. Now, Intel itself has become a target for acquisition.
Intel was once the world’s largest chip manufacturer, with its chips prevalent in personal computers and servers. However, the company’s leadership position was later overtaken by Taiwan Semiconductor Manufacturing Co. Additionally, due to Intel’s CEO Gelsinger’s costly transformation strategy and failure to anticipate how Wall Street’s strong interest in AI would fundamentally shift demand towards the types of chips produced by competitors like Nvidia, Intel’s problems have worsened.
Intel’s business has been on a downward spiral for years, accelerating in 2024. In August, Intel reported disappointing financial results, resulting in the largest single-day stock price drop in over fifty years.
On August 1st, Intel announced measures to cut costs, including a workforce reduction of over 15% and suspending dividends starting from the fourth quarter as the company strives to turn around its loss-making manufacturing business.
Intel also plans to halt factory construction in Poland and Germany and reduce its real estate holdings.