Qualcomm eyes Intel takeover

CALIFORNIA, UNITED STATES — Qualcomm, the U.S.-based chip giant, has recently approached Intel about a potential takeover.

The move comes as Intel, once the world’s largest chipmaker, grapples with declining market share and technological challenges.

Potential deal details

The Wall Street Journal first reported on the potential acquisition. Sources familiar with the matter have also confirmed that Qualcomm has initiated discussions with Intel regarding a possible acquisition. 

While the specific terms of the deal remain undisclosed, the merger would likely be one of the largest in tech history, given Intel’s substantial market capitalization of over $90 billion.

The news has already impacted the stock market, with Intel shares initially surging before closing up about 3%, while Qualcomm’s stock fell approximately 3%.

Semiconductor industry implications

A merger between these two chip giants could reshape the competitive landscape of the semiconductor industry. 

Qualcomm, a leading supplier of chips for smartphones and other devices, relies on external manufacturers like Taiwan Semiconductor Manufacturing Company and Samsung for production. It reported $35.8 billion in sales for fiscal 2023, compared to Intel’s $54.2 billion during the same period.

In contrast, Intel maintains its own fabrication facilities, a strategy that has proven costly in recent years. The company’s stock has plummeted 53% this year, reflecting investor concerns about its expensive plans to manufacture and design chips.

Intel has struggled to keep pace with the demand for AI chips, where Nvidia holds over 80% of the market. Most AI applications, like ChatGPT, run on Nvidia’s graphics processors rather than Intel’s central processors, further eroding Intel’s position in the industry.

Regulatory hurdles

Any potential deal between Qualcomm and Intel would face significant regulatory scrutiny. Both companies operate in China and have previously seen deals blocked by Chinese antitrust enforcers. 

Additionally, national security concerns could come into play, as demonstrated by the Trump administration’s 2018 decision to block Broadcom’s attempted acquisition of Qualcomm.