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Qualcomm Approaches Intel Over Potential Takeover
Intel shares have reportedly fallen 36% over the past year, and the company now has a market cap of around $93 billion (£69.8 bn), versus Qualcomm’s $188 billion (£141.2 bn).
Reports have surfaced that troubled chipmaker Intel has been approached by competitor Qualcomm about a possible takeover, in what would be one of the largest deals in the history of the technology industry.
The Wall Street Journal first reported on the moves by Qualcomm on Friday (September 20th) citing sources familiar with the situation, but so far no formal offer has been made, with discussions still at an early stage.
Qualcomm CEO Cristiano Amon is said to be personally involved in the negotiations with Intel, possibly sensing weakness following the 26% share price slump of its competitor last month and a disappointing earnings report in August, which resulted in a $30 billion (£22.5 bn) loss in market value.
Once the most valuable chipmaker in the world, Intel shares have fallen 36% over the past year, and the company now has a market cap of around $93 billion (£69.8 bn), versus Qualcomm’s $188 billion (£141.2 bn).
Intel has been struggling to make up for the reported $7 billion (£5.2 bn) in operating losses in 2023, as well as the $5.2 billion (£3.9 bn) it lost in 2022, though remains one of the world’s biggest chipmakers despite falling behind rivals like Nvidia in the race to develop AI server chips.
Intel’s ability to get back into the black was also hit badly when it lost out on a contract to design and fabricate Sony’s PlayStation 6 chip in 2022, according to reports from Reuters, coming second to the firm’s mainstay rival AMD, which boasts chips in every major game console aside from the Nintendo Switch.
Qualcomm, on the other hand, has seen a bounce in its growth, following the firm’s reentry to the desktop processor market this year as part of Microsoft’s AI PC strategy, and a recent forecast for fourth-quarter revenue that would exceed estimates.
At the company’s annual shareholder meeting in March, CEO Cristiano Amon said that Qualcomm would now focus on delivering intelligent computing and enabling generative AI, especially in the smart-phone market where its chips dominate.
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At the meeting, Amon said: “There are few companies that are as well positioned as Qualcomm to participate in the transformation of so many industries. Our technology roadmap has never been stronger, our diversification strategy is working, and the fundamentals of Qualcomm’s growth drivers remain unchanged.”
Despite Qualcomm’s successes, the company might yet have a harder time acquiring its rival than first reports suggest, with Bloomberg now reporting that Apollo Global Management Inc. has offered to make a multibillion-dollar investment in Intel Corp.
