Qualcomm has approached Intel over buy-out
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Qualcomm Corp. has approached struggling chip rival Intel about buying the company, according to reports that reference unnamed sources.
If an offer follows it would amount to one of the largest takeover bids ever in the technology industry. It would also likely bring anti-trust scrutiny that could take many quarters and could eventually thwart a deal.
Intel’s share price jumped above US$20 on the news taking Intel’s market capitalization to about US$95 billion. However, this is a long way short of Intel’s US$50 share price at the beginning of the year and a quarter-trillion-dollar valuation.
No formal offer has been made, but Qualcomm CEO Christiano Amon is said to be leading the approach. Qualcomm would only mount a friendly takeover, according to a Financial Times report referencing unnamed sources.
Qualcomm had previously been reported to be interested in buying parts of Intel including its PC processor business. If a whole-company deal does go through it is likely that Qualcomm could dispose of some parts of the company the reports said.
And on Monday Intel’s share price jumped up to US$22 on news that Apollo Global Management has offered to invest up to US$5 billion in Intel according to Bloomberg. Additional funds from Applo, alongs side awards from the US Department of Defense might help the company weather a stormy 2024 until it can start to perform better using its 18A manufacturing process technology in 2025.
Intel has been struggling for several years, ever since it fell behind foundry TSMC in terms of leading-edge chip manufacturing. This started to give fabless rivals, such as AMD and Nvidia, who used TSMC an advantage over Intel with its internal manufacturing.
Pat Gelsinger became CEO in February 2021 with a plan to resurrect the compay’s chip manufacturing and turn into a foundry operation that would operate independently from the processor product business. Gelsinger never suggested that manufacturing would be sold off but once the two operations are independent and reporting separate financial results it becomes harder to prevent a split.
And an Intel turnaround is not guaranteed or could take many years. And this could be time that investors are not prepared to give Gelsinger. In 2024 the company has seen large financial losses on declining sales giving rise to speculation around the future of the company and forcing recent cost cutting and structural changes.
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