Artificial intelligence generating text to image on a laptop with a Qualcomm Snapdragon X Elite chip. Photographer: Bridget Bennett/Bloomberg
Qualcomm Inc. has approached Intel Corp. to discuss a possible acquisition of the struggling chipmaker, people with knowledge of the matter said, raising the prospect of one of the largest merger and acquisition deals in history.
California-based Qualcomm in recent days proposed a friendly takeover of Intel, according to the people, who asked not to be identified discussing confidential information. The proposal is for the entire chipmaker, though Qualcomm has not ruled out buying or selling parts of Intel in a combination.
It’s unclear whether the initial approach will lead to a deal, and any agreement is likely to be subject to close antitrust scrutiny and take time to finalize, the people said. Qualcomm has been in talks with U.S. regulators and believes an all-U.S. combination could allay any concerns, they said.
Qualcomm is eyeing Intel at a time when its smaller rival is going through the most difficult period in its 56-year history. Under Chief Executive Pat Gelsinger, Intel is working on a plan to restructure the company and revive its flagging stock price.
While Gelsinger still believes the turnaround plan could be enough to keep Intel as an independent company, he is open to considering the merits of different transactions, the people said. Both companies will now evaluate various options with advisers, they said.
Intel shares have fallen 37 percent over the past 12 months, giving it a market value of about $93 billion. Qualcomm shares have risen more than 50 percent over the same period, giving it a market capitalization of about $188 billion. At those values, any deal between Qualcomm and all of Intel would rank among the largest in history, data compiled by Bloomberg show.
On Friday, the Wall Street Journal reported on Qualcomm’s interest, sending Intel’s shares up more than 3 percent. Representatives for Qualcomm and Intel declined to comment.
While Qualcomm’s approach raises the possibility of others entering the fray, at least one major rival is choosing to stay on the sidelines for now.
Broadcom Inc. is not currently considering a bid for Intel, people familiar with the matter said. The company had previously been considering pursuing a deal, the people added.
Advisers are continuing to pitch ideas to Broadcom, the people said. A Broadcom representative declined to comment.
Intel is headed for its third straight year of declining sales, with revenue projected to reach $52 billion in 2024, just 70 percent of what it generated in 2021. Shares got a boost this week after the company made a series of announcements that spurred optimism about Gelsinger’s turnaround plan.
In the most notable move, Intel reached a multibillion-dollar deal with Amazon.com Inc.’s Amazon Web Services cloud unit to co-invest in a custom AI semiconductor and outlined a plan to spin off its ailing manufacturing business, or foundry, into a wholly owned subsidiary.
The decision to separate Intel’s foundry operations from the rest of the company is partly intended to convince potential customers — some of whom compete with Intel — that they are dealing with an independent supplier. Bloomberg had previously reported that the company was weighing this option.
(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First published: September 21, 2024 | 11:39 PM IS
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