Qualcomm CEO Cristiano Amon speaks on the Computex discussion board in Taipei, Taiwan, June 3, 2024.
Ann Wang | Reuters
Qualcomm not too long ago approached struggling chipmaker Intel a couple of takeover, CNBC has confirmed.
It wasn’t clear if Intel had engaged in conversations with Qualcomm or what the phrases could be, in response to an individual acquainted with the matter who requested to not be named as a result of the knowledge was confidential.
The Wall Road Journal was first to report on the matter. Intel shares initially popped on the information earlier than closing up about 3%, whereas Qualcomm shares fell about 3% on the shut.
The deal, if it had been to occur, could be one of many largest expertise mergers ever. Intel has a market cap of over $90 billion.
As soon as the world’s largest chipmaker, Intel has for years been in a downward spiral that accelerated in 2024. The inventory had its largest one-day drop in over 50 years in August after the corporate reported disappointing earnings. Intel shares are down 53% this yr as buyers specific doubts concerning the firm’s expensive plans to fabricate and design chips.
Qualcomm and Intel compete in a number of markets, together with for PC and laptop computer chips. Nevertheless, Qualcomm, in contrast to Intel, does not manufacture its personal chips, and as a substitute depends on corporations comparable to Taiwan Semiconductor Manufacturing Firm and Samsung to deal with manufacturing.
On Monday, after a board assembly to debate technique, Intel CEO Patrick Gelsinger despatched a memo to workers that reiterated the corporate’s dedication to investing closely in its foundry enterprise, a venture that would price $100 billion over the subsequent 5 years. It additionally mentioned that it was weighing outdoors funding.
Intel has additionally missed out on the substitute intelligence growth that is captured the eye of Wall Road. Many of the superior AI packages, comparable to ChatGPT, run on Nvidia graphics processors, as a substitute of Intel central processors. Nvidia has greater than 80% of the fast-growing market, in response to analysts.
Qualcomm generates much less income than Intel. It reported $35.8 billion in gross sales in fiscal 2023, in contrast with Intel’s $54.2 billion throughout the identical interval.
A possible deal could be sophisticated by antitrust and nationwide safety issues. Each Intel and Qualcomm do enterprise in China, and each have seen offers scuttled by Chinese language antitrust enforcers. Intel was unsuccessful with its tried acquisition of Tower Semiconductor, as was Qualcomm in its bid to accumulate NXP Semiconductor.
Different big acquisitions within the house have additionally been scuttled. In 2017, Broadcom made a bid to purchase Qualcomm for greater than $100 billion. The Trump administration blocked the deal the next yr on nationwide safety considerations, as a result of Broadcom was based mostly in Singapore on the time. And in 2021, the Federal Commerce Fee sued to dam Nvidia’s tried buy of Arm on antitrust grounds. The deal was referred to as off in 2022 following further strain from regulators in Europe and Asia.
Representatives for Qualcomm and Intel declined to remark.
