CALIFORNIA, UNITED STATES – In a potential industry-changing move, chipmaker Qualcomm has approached Intel about a possible takeover, according to sources familiar with the situation. If successful, this deal would become one of the largest in technology history, as Intel’s market value exceeds $90 billion.
While details of the proposal have not been disclosed, initial market reactions were swift. Intel’s stock rose by 3.3%, while Qualcomm shares fell 2.9% as investors weighed the potential impact of such a monumental merger.
Early-stage talks and market reactions
Qualcomm’s CEO, Cristiano Amon, is said to be personally leading the negotiations, although the discussions are still in early stages. A formal offer has not yet been made, according to people close to the matter. Earlier reports from Reuters suggested that Qualcomm was specifically interested in acquiring parts of Intel’s design business, particularly its PC unit, but now the talks appear to involve broader considerations of Intel’s entire portfolio. The Wall Street Journal first reported the discussions on Friday.
Analysts believe this merger could reshape the competitive landscape of the semiconductor industry, especially as both companies face challenges in adapting to the artificial intelligence (AI) boom.
Intel, meanwhile, has been actively pursuing a turnaround strategy, focusing on AI processors and building a chip contract manufacturing business, known as a foundry. This is part of a broader effort to regain its competitive edge in the tech industry, which has increasingly leaned on AI technologies.
CEO Pat Gelsinger, in a memo following a recent board meeting, outlined plans to restructure the company, reduce real estate holdings, and pause the construction of factories in Poland and Germany. Additionally, Intel has secured a deal to manufacture a custom networking chip for Amazon Web Services (AWS).
Challenges and history of blocked deals
If the talks progress, any deal would face significant regulatory hurdles, including antitrust scrutiny and national security concerns. Both Qualcomm and Intel conduct extensive business in China, a region that has previously blocked similar deals.
Additionally, US authorities have a history of intervening in large tech mergers, such as the blocked acquisition attempts involving Broadcom and Qualcomm, and Nvidia’s failed bid for Arm.
Despite Qualcomm generating less revenue than Intel, with $35.8 billion in sales in 2023 compared to Intel’s $54.2 billion, the potential acquisition reflects Qualcomm’s ambition to expand its influence in the rapidly evolving tech landscape.
