In a stunning move, chip giant Qualcomm Inc. (QCOM) has reportedly approached struggling rival Intel Corp. (INTC) with a takeover offer. This potential deal, if successful, would be a game-changer in the tech world, as Intel boasts a market value of roughly $90 billion.
The Wall Street Journal, citing sources familiar with the matter, revealed Qualcomm’s recent attempt to acquire Intel. However, the path to completion is far from clear. Antitrust scrutiny is a major hurdle, potentially jeopardizing the deal.
Intel, once the undisputed king of chips, has suffered a dramatic decline in recent years, with its share price plummeting by 60% in 2023 alone. The company’s market value, which peaked at over $290 billion in 2020, now stands at a significantly lower level. Meanwhile, Qualcomm, valued at around $185 billion, has been performing better.
A successful acquisition would dramatically expand Qualcomm’s reach, adding Intel’s chips, widely used in PCs and servers, to its existing mobile phone chip business. Both companies are vying for a piece of the booming artificial intelligence market, but they have fallen behind AI chip leader Nvidia Corporation (NVDA).
Intel has been grappling with a series of crises, including a disappointing August earnings report that prompted plans for layoffs and the suspension of dividend payments. The company also reported a $1.6 billion loss in the second quarter, a sharp contrast to the $1.5 billion profit from the same period a year earlier.
Qualcomm’s bid follows more than three years of attempts to turn around Intel under CEO Pat Gelsinger, efforts that have yet to yield substantial results. If successful, the takeover would be the largest technology M&A deal in history, surpassing Microsoft Corporation’s $69 billion acquisition of Activision Blizzard.
The potential deal highlights Intel’s struggles and Qualcomm’s ambition to expand its dominance in the chip industry. However, the complex regulatory environment and the sheer size of the deal present significant challenges to a successful acquisition. The coming weeks and months will be crucial in determining the fate of this potential tech giant.
