Qualcomm Recently Discussed Takeover with Intel, Source Reveals, According to Reuters

By Max A. Cherney

SAN FRANCISCO (Reuters) – Qualcomm has recently initiated discussions with Intel regarding a potential acquisition of the struggling chipmaker, according to a source familiar with the situation. This could be a significant transformation for the industry, although many challenges lie ahead.

Qualcomm CEO Cristiano Amon is actively involved in the negotiations to acquire the nearly 50-year-old Intel, as revealed by the source. Another individual familiar with the matter indicated that Amon has been exploring various options for a potential deal.

Earlier this month, reports emerged that Qualcomm had considered acquiring parts of Intel’s design business, with particular interest in their PC design unit. Qualcomm executives are reviewing Intel’s entire range of business operations.

The conversations are reportedly in the early stages, and Qualcomm has yet to make a formal offer for Intel, according to a third source.

The sources spoke on condition of anonymity due to the confidential nature of the discussions.

Intel declined to comment, while Qualcomm did not respond promptly to a request for comment.

Intel’s stock closed 3.3% higher, whereas Qualcomm saw a decline of 2.9%.

Qualcomm’s approach comes at a precarious time for Intel, once the world’s leading chipmaker, whose shares have plummeted nearly 60% this year.

Should a deal proceed, it would likely attract scrutiny from antitrust regulators in the U.S., China, and Europe. Qualcomm might need to divest some of Intel’s assets to secure regulatory approval.

This potential bid would be the largest takeover attempt in the technology sector since Broadcom attempted to acquire Qualcomm for $142 billion in 2018 before regulatory concerns halted the merger.

It remains unclear how Qualcomm, with a market value of $188 billion, would finance a bid for Intel, which is valued at approximately $122 billion, including its debt. Qualcomm currently has around $13 billion in cash.

There is also uncertainty about how Qualcomm would manage the takeover of Intel’s contract manufacturing operations. Intel has invested hundreds of billions over decades to develop its highly precise chip fabrication processes, supported by tens of thousands of engineers.

Qualcomm, lacking experience in operating a chip factory, currently relies on companies like Taiwan Semiconductor Manufacturing for chips and utilizes technology supplied by Arm Holdings.

INTEL’S WOES

Once a leader in the chipmaking arena, Intel has lost its manufacturing advantage to TSMC and has struggled to produce widely sought-after chips for the generative AI market, which has been dominated by Nvidia and AMD.

Intel is attempting to recover by focusing on AI processors and establishing a chip contract manufacturing business, known as a foundry.

In a recent memo, CEO Pat Gelsinger outlined various strategic changes following a board meeting, including plans to streamline operations by divesting certain businesses and restructuring the company.

The company intends to pause construction on factories in Poland and Germany and reduce its real estate holdings. Intel has also confirmed a deal to develop a custom networking chip for a major cloud services provider.

The Wall Street Journal previously reported on Qualcomm’s discussions with Intel.