Qualcomm has, in recent days, approached Intel to explore a potential acquisition of the troubled chipmaker, a source familiar with the situation told Reuters. This could be a transformational deal in the sector but faces many hurdles. Intel has not commented.
Qualcomm CEO Cristiano Amon is personally involved in the negotiations to acquire five decade-old Intel. Earlier this month, Reuters reported that Qualcomm explored the possibility of acquiring portions of Intel's design business and that its PC design unit was of particular interest. Qualcomm executives were examining Intel's entire portfolio of businesses.
The approach by Qualcomm comes at a time of weakness for Intel, which was once the most valuable chipmaker in the world but whose shares have lost nearly 60% of their value since the start of the year. If a deal should go ahead, it would likely invite scrutiny from anti-trust regulators in the United States, China and Europe.
A bid would mark the biggest take-over attempt in the technology industry since Broadcom sought to buy Qualcomm for US$142 billion in 2018 before President Donald Trump intervened citing national security risks.
Market commentators questioned how Qualcomm, which has a market value of US$188 billion and US$23 billion in cash, would finance a bid for Intel, which is valued at US$122 billion, including its debt.
It is also unclear how Qualcomm would handle the take-over of Intel's contract manufacturing business. To build chips with an atomic level of precision, Intel has invested hundreds of billions of dollars over decades on its fabrication process and amassed tens of thousands of engineers to do it.
Qualcomm has never operated a chip factory and currently contracts the likes of Taiwan Semiconductor Manufacturing Co.
Once the dominant force in chipmaking, Intel ceded its manufacturing edge to Taiwanese rival TSMC and failed to produce a widely desired chip for the generative AI boom capitalised on by Nvidia.
Intel has been attempting to turn its business around by focusing on AI processors and creating a chip contract manufacturing business known as a foundry. As part of a memo from CEO Pat Gelsinger, Intel released a series of announcements that stemmed from a board meeting last week. Gelsinger and other executives presented a plan to shave off businesses and restructure the company.
The company plans to pause construction of factories in Poland and Germany and reduce its real estate holdings. Intel also said it had reached a deal to make a custom networking chip for AWS.
