MENA Newswire News Desk: Chipmaker Qualcomm has approached its struggling rival Intel about a possible takeover in recent days, according to sources familiar with the matter. The potential deal, which remains far from certain, has yet to result in a formal offer. Qualcomm, which primarily outsources its chip production, is exploring the acquisition to expand its presence in the semiconductor industry by acquiring Intel, once a dominant leader in chip manufacturing.
If the acquisition proceeds, it would surpass Microsoft’s $69 billion purchase of Activision Blizzard as one of the largest tech deals in history. Intel’s stock surged by 8% following reports of the approach, bringing its market capitalization to $93 billion. Qualcomm, valued at $188 billion, is evaluating how to fund the deal, as it continues to assess Intel’s assets and potential synergies.
Intel has faced substantial challenges over the past few years, culminating in a $1.6 billion loss and the announcement of over 15,000 job cuts earlier this year. Under CEO Pat Gelsinger, who took the helm in 2021, the company has undertaken a five-year turnaround plan, but progress has been hindered by setbacks in its chip manufacturing operations and increased competition from companies like AMD and Nvidia.
Qualcomm’s approach comes at a time when Intel is already working with financial advisors, including Goldman Sachs and Morgan Stanley, to evaluate its strategic options and potential defensive moves against activist investors. Intel has also reportedly considered selling off certain assets to streamline operations and focus on its core businesses.
A successful acquisition of Intel would likely face intense scrutiny from regulators over antitrust concerns and national security implications. However, sources suggest that Qualcomm might pitch the deal to U.S. regulators as a strategic move to strengthen American chipmakers in their competition with Chinese manufacturers, such as those backed by Taiwan Semiconductor Manufacturing Company (TSMC).
Despite the potential benefits, industry analysts have expressed skepticism over the feasibility of such a deal. In a report, analysts at Citi argued that Intel would be better off exiting its semiconductor manufacturing business rather than pursuing a merger with Qualcomm. They noted that a sale could face strong opposition from Intel’s shareholders and warned that the lengthy acquisition process might allow foreign competitors to gain an advantage. Intel and Goldman Sachs declined to comment, while Morgan Stanley and Qualcomm did not immediately respond to requests for comment.