Qualcomm has approached Intel about an acquisition in recent days
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Chipmaker Qualcomm has approached struggling rival Intel about a possible takeover in recent days, according to two people familiar with the matter.
A deal is still uncertain and no formal offer has been made, according to people familiar with the approach. A person close to Qualcomm said the chipmaker would pursue only a friendly deal, and people familiar with Intel’s thinking said the company was concerned that a deal would be blocked by antitrust regulators.
A full takeover of Intel would surpass Microsoft’s $69 billion acquisition of Activision as the largest technology deal in history. Intel’s market cap was $93 billion on Friday after its stock rose 8 percent following initial reports of Qualcomm’s approach. Wall Street Journal.
Once the world’s largest chipmaker, Intel’s years-long decline has accelerated in recent months. The company lost nearly $30 billion in market value in August after a disastrous earnings report in which CEO Pat Gelsinger announced 15,000 cut jobs and cancel dividends.
Intel’s stock price has fallen 50 percent since the beginning of the year, leaving the company wary of being approached by potential bidders and the threat of hostile shareholders.
Intel is working with Goldman Sachs and Morgan Stanley to evaluate Qualcomm’s approach, people familiar with the matter said. For months, investment bankers from Morgan Stanley have been advising the company on how to defend itself against activist investors, a move that previously reported by CNBC.
People familiar with the company’s plans say Intel is considering various asset sale options.
Qualcomm has raised the possibility of a full takeover of Intel after considering acquiring some of Intel’s assets, people familiar with the matter said, confirming a previous report by Reuters.
Unlike Intel, Qualcomm does not make its own chips, instead outsourcing production to outside manufacturers. Qualcomm, which has a market capitalization of $188 billion, is working with investment bank Evercore to evaluate its approach to Intel.
It is unclear how they would finance a full takeover of Intel, or whether they would divest assets as part of the deal. A deal would likely face intense antitrust scrutiny and political concerns about national security.
If the deal goes ahead, it would be presented to U.S. regulators as an effort to bolster American chipmakers in the race to compete with Chinese manufacturers, according to people familiar with the matter.
The people warned that a lengthy acquisition process could leave chipmakers behind foreign rivals, a concern that could derail the deal.
Intel and Goldman Sachs declined to comment. Morgan Stanley, Evercore and Qualcomm did not immediately respond to requests for comment.
The approach adds pressure to Gelsinger, who was appointed in 2021 and is three years into a five-year turnaround plan aimed at turning Intel into a chipmaker that can compete with industry leader Taiwan Semiconductor Manufacturing Company.
The company encountered some obstacles along the way: high CEO Profile have left, including industry veteran Lip-Bu Tan, who has left the company’s board. Intel has also lagged rivals Nvidia and AMD in sales of artificial intelligence chips for data centers.
Intel shareholders would likely oppose a sale to Qualcomm, analysts at Citi argued in a note published Friday. They said Intel should divest its semiconductor business “as we believe the company has little chance of becoming a profitable advanced foundry.”
The takeover talks are “almost too absurd to comment on,” they wrote.
