Anamika Dey, editor
Brief news
- Intel is facing financial struggles and has been approached by Qualcomm for a potential acquisition, which could be a significant tech merger.
- Intel’s stock has dropped 53% this year, while Qualcomm’s shares fell 3% after the acquisition news.
- Antitrust and national security issues may complicate the deal, as both companies have faced regulatory challenges in the past.
Detailed news
The chipmaker Intel, which is currently experiencing financial difficulties, was recently approached by Qualcomm regarding a potential acquisition, according to CNBC.
According to an individual who requested anonymity due to the confidentiality of the information, Intel’s involvement with Qualcomm and the anticipated terms were unclear.
The Wall Street Journal was the initial publication to report on the issue. Qualcomm shares declined by approximately 3% at the close, while Intel shares initially surged in response to the news.
The transaction would be one of the most significant technology mergers in history if it were to occur. Intel’s market capitalization exceeds $90 billion.
Intel, which was once the world’s largest chipmaker, has been in a downward spiral for years, which intensified in 2024. In August, the company reported disappointing earnings, resulting in the stock’s largest one-day decline in more than 50 years. Investors’ concerns regarding Intel’s costly initiatives to manufacture and design processors have resulted in a 53% decline in its stock price this year.
Qualcomm and Intel are competitors in numerous markets, including the production of processors for personal computers and laptops. Nevertheless, Qualcomm, in contrast to Intel, does not produce its own processors; rather, it contracts with companies like Samsung and Taiwan Semiconductor Manufacturing Company to manage production.
Intel CEO Patrick Gelsinger issued a memo to employees on Monday following a board meeting to deliberate on strategy. The memo reaffirmed the company’s dedication to investing significantly in its foundry business, a project that could incur a cost of $100 billion over the next five years. Additionally, it declared that it was contemplating external investment.
Intel has also been excluded from the artificial intelligence growth that has captivated Wall Street. Instead of Intel central processors, the majority of sophisticated AI programs, including ChatGPT, operate on Nvidia graphics processors. Analysts assert that Nvidia controls over 80% of the rapidly expanding market.
Intel generates more revenue than Qualcomm. In fiscal 2023, it reported sales of $35.8 billion, which was lower than Intel’s $54.2 billion during the same period.
Antitrust and national security concerns would complicate the prospective transaction. Intel and Qualcomm are both involved in business operations in China; however, they have experienced the termination of agreements by Chinese antitrust regulators. Intel’s acquisition of Tower Semiconductor was unsuccessful, as was Qualcomm’s attempt to acquire NXP Semiconductor.
Additional significant acquisitions in the industry have also been dropped. Broadcom submitted an offer to acquire Qualcomm for over $100 billion in 2017. The transaction was barred by the Trump administration the following year due to national security concerns, as Broadcom was headquartered in Singapore at the time. In 2021, the Federal Trade Commission filed a lawsuit to prevent Nvidia from acquiring Arm on the basis of antitrust. The agreement was terminated in 2022 as a result of heightened regulatory pressure from Europe and Asia.
Qualcomm and Intel representatives declined to provide commentary.
Source : CNBC News
