Intel's Potential Deals: Apollo's Offer and Qualcomm's Interest Shake Up Chip Industry

Intel gets multibillion-dollar Apollo offer as Qualcomm circles

Apollo Global Management has proposed a multibillion-dollar investment in Intel, providing an alternative to Qualcomm's potential takeover. This comes as Intel works on a turnaround strategy under CEO Pat Gelsinger. The proposal could change or fall apart, with Intel executives currently weighing the offer.Apollo Global Management Inc. has offered to make a multibillion-dollar investment in Intel Corp., people familiar with the matter said, providing the chipmaker with a vote of confidence in its turnaround strategy and an alternative to a potential takeover by larger rival Qualcomm Inc. The alternative asset manager has indicated in recent days that it would be willing to make an equity-like investment in Intel of as much as $5 billion, one of the people said, asking not to be identified discussing confidential information. Also Read: Chipmaker Qualcomm weighs friendly takeover of Intel The development comes after San Diego-based Qualcomm floated a friendly takeover of Intel, which has been working to reinvent itself amid the most difficult period in its 56-year history. Qualcomm's move has raised the prospect of one of the biggest-ever M&A deals, as well as other bidders entering the fray. Broadcom Inc., at least for now, is on the sidelines. Intel's shares rose as much as 4.2% in early trading on Monday. The stock was up 2.7% at 9:43 a.m. in New York, giving the company a market value of about $96 billion. Intel executives have been weighing Apollo's proposal, according to the people. The size of Apollo's potential investment could change or discussions could fall apart, they said. Representatives for Apollo and Santa Clara, California-based Intel declined to comment. While Apollo may be best known today for its insurance, buyout and credit strategies, the firm started out in the 1990s as a distressed-investing specialist. The firm also has an existing relationship with Intel, which in June agreed to sell to Apollo a stake in a joint venture that controls a chip plant in Ireland for $11 billion, bringing in more external funding for a massive expansion of its factory network. Under Chief Executive Officer Pat Gelsinger, Intel has been working on an expensive plan to remake itself and bring in new products, technology and outside customers. Still, the company is headed for its third consecutive year of shrinking sales and its shares have lost more than 50% of their value this year. Intel's shares did get a bounce last week after Gelsinger made a series of announcements signaling the beginnings of a turnaround. Those included a multibillion-dollar deal with Amazon.com Inc.'s Amazon Web Services cloud unit to co-invest in a custom AI semiconductor and a plan to turn its ailing manufacturing business into a wholly owned subsidiary. Intel also said it would pull back on some projects, including shelving plans for new factories in Germany and Poland for now. Gelsinger believes the turnaround plan could be sufficient for Intel to remain an independent company but is open to considering the merits of different transactions, people familiar with the matter said on Saturday. Broadcom isn't currently evaluating an offer for Intel, the people said, having previously assessed whether to pursue a deal. A combination of Intel with a larger competitor would almost certainly draw intense scrutiny from antitrust regulators around the world, as chips are now integral to the digital framework supporting everyday life -- from smartphones and computers, to washing machines and electric vehicles. A Qualcomm-Intel deal would face multiple hurdles, Bloomberg Intelligence analysts Kunjan Sobhani and Oscar Hernandez Tejada wrote in a note. "The deal faces significant regulatory, financial and execution challenges," they wrote. "With only $13 billion in cash on hand, Qualcomm would likely need additional investors and asset divestitures to make the purchase feasible. The deal's strategic fit could also raise concerns." Apollo has other experience in the chipmaking space. Last year, the New York-based firm agreed to lead a $900 million investment in Western Digital Corp., buying convertible preferred stock.

Why all eyes are on Intel now

This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in. When The Wall Street Journal dropped the news on Friday that Qualcomm had approached Intel with a potential takeover, tech forums were abuzz -- and for good reason for the shake-up. A rescue for Intel is bound up with debates about the US's shifting role in the world's chip industry and the battle for dominance in the era of accelerated computing. Intel has been trying to correct its course for years. In 2021, it brought back CEO Pat Gelsinger, a former VMware CEO and a longtime Intel executive, to revive its leadership status in the chips industry. It has recently benefited from CHIPS and Science Act funding to create more microchip manufacturing capabilities in Arizona. And it made a series of acquisitions to catch up on developing more advanced architectures and profit from the AI boom. Intel's American manufacturing efforts are a big gamble for the company's future. Each new fab can take billions of dollars and three to four years to complete, time which Intel may not have on its side. Even if Qualcomm acquired Intel, it's unclear what it would do with its manufacturing operations. While Intel has built Ohio factories, major chip designers have not publicly signed up. "They just dropped the ball there, and until now, they're trying to build the foundry business, but they haven't even proven that they can make stuff for themselves yet," said Stacy Rasgon, a senior analyst at Bernstein Research. Intel was instrumental to the personal computer boom in the 1990s, designing and manufacturing cutting-edge microprocessors. With its x86 CPUs (central processing units), Intel drove rivals such as AMD out of the market. Because of its focus on PCs, Intel chose not to capitalize on mobile chip growth in the 2000s -- a big mistake because of the iPhone boom. In a 2013 interview with The Atlantic, former Intel CEO Paul Otellini expressed regret for passing up a deal with Apple to design and manufacture chips for the iPhone before the smartphone was introduced. The two companies could not reach an agreement because Intel's forecasts said that volume would not make up for the cost. "We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we'd done it," Otellini told The Atlantic. "And in hindsight, the forecasted cost was wrong, and the volume was 100x what anyone thought." Another opportunity came along when OpenAI approached Intel for an investment. OpenAI wanted to reduce its reliance on Nvidia's chips for its AI and build its own infrastructure. The deal fell through, and according to a Reuters report, Intel's leadership did not think generative AI models would make it to the market soon. That bet would later come to bite back Intel, and now OpenAI has billions in backing from Microsoft. Intel bought the deep learning startup Nervana Systems in 2016 to invest in AI. The chipmaker soon ceased operations at Nervana and placed its bets on Israeli startup Habana Labs, which it acquired for $2 billion in 2019. Habana helped launch Intel's next-generation Gaudi AI chip for businesses this year. While Intel focused on CPUs, competitors like chip designers AMD and Nvidia hedged their bets on GPUs, or graphics processing units, that could assist with accelerated computing, a critical need for training AI. "They didn't really have a GPU product road map," Rasgon said. Intel had a stand-alone graphics chip called Larrabee in beta development. However, the project was canceled in 2009 and converted to a software development platform after failing to hit performance targets. "Nvidia's dominance didn't come from luck. It came from vision and execution. Which Intel lacked," tweeted Bryan Catanzaro, vice president of applied deep learning research at Nvidia, who previously worked at Intel as an intern on the Larrabee project. The CPUs that made Intel big now have presented what Logan Purk, senior analyst at Edward Jones, called "the inventor's dilemma," when newer technology replaces established incumbents. "I think management just rested on their laurels, so to speak, and there wasn't a strong competitor nipping at their heels to force them to continue to push that innovation," Purk said. Intel's customers and rivals took their silicon business overseas to cut costs. Companies like AMD and Nvidia decided to leapfrog on chip designs while outsourcing manufacturing. Intel's manufacturing capabilities fell behind its customer demands. It ran into delays for its chips while TSMC was shipping chips for Apple, AMD, and Qualcomm. In 2020, Intel announced a delay to its 7-nanometer chips due to a "defect mode" that would have been key for its next generation of chips. Samsung and TSMC soon announced more advanced manufacturing capabilities, fitting more transistors in a processor and leaving Intel behind once again. After using Intel's chips for 15 years on its Macbooks, Apple debuted its in-house chip design with the M1 in 2020 and contracted out manufacturing to TSMC. Intel is now placing its bets on the 18A chip and its Xeon data center chips. Gelsinger's latest announcements point to creating an independent subsidiary for Intel's foundries, allowing more independence to obtain and borrow capital. A cash rescue could be coming. Mobile chipmaker Qualcomm approached Intel to acquire its chip-designing business and, later, a merger deal, Reuters and the Journal reported, respectively. Apollo Global Management has also offered an "equity-like" investment of up to $5 billion, Bloomberg reported. "If Intel was to be acquired by like a Qualcomm or a Broadcom, or any of these other big chip companies, that would be one of the biggest deals that has ever occurred in the chip space. Like monumental," said Dan Morgan, a senior trust portfolio manager at Synovus. The merger could also reinvigorate the Biden administration's efforts to position the US as a global chip manufacturing hub and create a competitor capable of challenging Nvidia's monopoly in the AI chip market, Morgan said. Though it would help Qualcomm diversify its products, the takeover would be a difficult bridge between the two companies and would not patch up Intel's weaknesses, analysts said. "Now, you're buying their PCs and servers at present, but you're buying all the issues in their foundry business. Why would you want to get involved in that? That is a huge undertaking," said Morgan.

Don't count on a megadeal to save Intel

Intel has never been this cheap. That doesn't make the storied chip maker a great deal. Once the world's most dominant designer and producer of advanced semiconductors, Intel's stock price has collapsed this year as its problems have mounted. The company's disastrous second-quarter report in early August put its market capitalization below $100 billion for the first time since 2012. It also pushed the stock below the company's book value -- largely consisting of factories and intellectual property minus its net borrowings -- for the first time in at least four decades, according to data from FactSet. Such an epic crash understandably draws out bargain hunters looking to kick the tires. The Wall Street Journal reported Friday that Qualcomm has made a takeover approach, though at what price and other terms couldn't be learned. It wouldn't exactly be a minnow swallowing a whale; Qualcomm's projected revenue over the next 12 months is more than three-quarters of what Intel is expected to produce. Still, even a modest takeout premium would put the deal's value over $100 billion. That is about eight times the cash on Qualcomm's balance sheet and would involve substantial debt or significant dilution of the company's shareholders -- or likely both. Wall Street has serious doubts. Qualcomm's shares fell nearly 2% Monday after slipping nearly 3% Friday. "We are skeptical of the merits of any potential transaction," wrote Vivek Arya of BofA Securities in a report. Chris Danely of Citigroup was even more direct. "Almost too silly to comment on," he wrote in a note to clients. But questionable deals still have a way of happening, or trying to happen. And Intel in its current predicament is drawing all types of interest. Bloomberg reported over the weekend that distressed investment specialist Apollo Global Management has offered to buy an equity stake of up to $5 billion in the chip maker. That could end up being a more plausible option given Intel's cash needs and less likelihood of regulatory hurdles. Intel's share price rose more than 3% Monday. A full acquisition, though, poses all sorts of problems for a buyer, whether it is Qualcomm or anyone else. Intel is essentially two businesses now -- a semiconductor design shop and a chip manufacturing operation. A restructuring announced earlier this month further solidified the move, but it has been under way for the past three years, ever since Pat Gelsinger came back aboard the company as chief executive and began leading an ambitious turnaround plan to regain the company's lead in manufacturing technology while also building a foundry business to produce chips designed by other firms. It has been an expensive undertaking. Intel's foundry operation lost $5.3 billion in the first six months of this year, while 99% of its revenue is coming from Intel's own internal needs. The expense of catching up its manufacturing tech caused the once-flush Intel to burn through about $12.6 billion in cash over the past four quarters. Wall Street expects the annual cash burn to continue through at least next year, according to FactSet estimates. And the design side of the business isn't faring much better. Personal computers and data center servers still generate the bulk of Intel's chip sales. Revenue growth on the PC side has improved a bit over the past two quarters as industry sales have pulled out of a slump, but Intel's data center business has been decimated by the shift in spending to Nvidia's artificial-intelligence systems. Intel is still the dominant vendor in CPU chips for both PCs and servers, but it has lost valuable share in both segments to rival Advanced Micro Devices. Mercury Research estimates Intel's share in server CPU chips was 75.6% in the first half of this year. Intel had 99% of that market in 2017. Hence, any buyer would need the ability to solve multiple existential threats while also getting such a deal through regulators that would include China, given the company's facilities there. That alone makes a full Intel buyout far less likely; China has already stymied several large deals involving U.S. tech firms that include both Intel and Qualcomm. Of China, Stacy Rasgon of Bernstein noted Monday that "a weaker Intel and a weaker US semiconductor manufacturing footprint is probably better for them." Intel certainly needs more friends these days, but buyers will be hard to come by.

Intel stock rises on news of investment offer from Apollo

Intel shareholders are finally getting used to good news again. The financial giant Apollo Global Management appears poised to offer an equity-like investment of as much as $5 billion in the distressed U.S. chipmaker, according to a report from Bloomberg on Sunday. The move would be a major vote of confidence in the recovery effort led by Intel CEO Pat Gelsinger, which has till now brought only worsening earnings reports and a plunging stock price. Intel has shed over $100 billion in market cap this year with shares falling over 50% as one of Silicon Valley's original powerhouses struggles to remake itself. The stock surged 5% in premarket trading Monday on the Apollo news and remains up roughly 1.5% from Friday's close, however, building off last week's gains. News of a deal with Amazon Web Services to produce an advanced AI chip and the company's plans to spin off its struggling foundry business have helped shareholders get a much-needed reprieve, with shares rising 14.5% over the previous two weeks. Apollo's offer comes shortly after news that chipmaking rival Qualcomm has approached Intel to explore a friendly acquisition. A deal would be one of the largest in the history of M&A, but it would almost inevitably face regulatory hurdles. It would also underline just how far Intel has fallen from the semiconductor mountaintop. Once the world's largest chipmaker, Intel's market cap of $93 billion is now roughly half of that of Qualcomm. Shares of Intel rose 3.4% Friday on reports of Qualcomm's approach, while the stock of the San Diego-based company dropped 2.9% as investors considered the risks of such a deal. Intel, meanwhile, continues to wrestle with cost and competitive pressures. The market for traditional PC chips, or CPUs, has traditionally been Intel's bread and butter business. It's faltered, however, under competition from Advanced Micro Devices, or AMD, whose cheaper and more efficient ARM-CPUs have caused Intel to lose market share. On its face, the company also appeared poised to take advantage of the AI boom. In reality, the company hasn't produced anything that can hold a candle to Nvidia's GPUs, or graphic processing units, which are all but essential for companies training GenAI models. Intel's foundry business, which is becoming an independent subsidiary, fell well behind the likes of TSMC. Amid another disappointing earnings release and a dim forecast, the company announced in August it would reduce its workforce by 15%, a loss of roughly 15,000 employees, as a part of a $10 billion cost-cutting effort. In the pursuit of semiconductor supremacy, however, the U.S. government remains in Intel's corner. Last week, the Biden administration announced it would award Intel up to $3 billion in CHIPS Act funding as part of an effort called the Secure Enclave, which aims to ensure a steady supply of cutting-edge chips for defense and intelligence purposes. That's in addition to a $8.5 billion grant awarded to the company in February for building several major plants. That sort of backing appears to have Apollo, the famed alternative asset manager founded by Marc Rowan, Leon Black, and Josh Harris, betting on a turnaround. The firm, which boasts nearly $700 billion in assets under management, per PitchBook, has worked with Intel before. Earlier this year, Apollo said it would buy an $11 billion stake in a joint venture that controls Intel's new manufacturing facility in Ireland.

Intel is having a brutal year -- but suddenly everybody wants a piece of it

Intel (INTC) is reportedly in talks for two multi-billion dollar deals -- including a takeover -- as the struggling chipmaker continues to draw interest from investors. Bloomberg, citing unnamed sources familiar with the matter, reports that alternative asset manager Apollo Global Management (APO) has offered to invest as much as $5 billion. That comes just days after The Wall Street Journal reported that Qualcomm approached Intel with a takeover bid. Intel stock rose 4% to $22.69 per share in pre-market trading Monday. After missing revenue expectations for its second-quarter earnings in August, the once-dominant chipmaker's stock fell 27%. The company reported revenue of $12.8 billion in the second quarter of 2024, falling short of Wall Street's $12.9 billion estimates. So far this year, Intel has seen its stock slide 54%, as it falls behind new rivals like Nvidia (NVDA) amid the artificial intelligence boom. The earnings miss was partly due to Intel's decision to "more quickly ramp" its Core Ultra artificial intelligence CPUs, or core processing units, that can handle AI applications, Intel chief executive Pat Gelsinger said on the company's earnings call. To help give its business a boost, Intel announced a plan to save $10 billion in 2025. That includes reducing its headcount by roughly 15,000, or 15% of its workforce. Gelsinger said these were the "most consequential changes" in the company's history. The Santa Clara, California-based company has also reportedly hired Morgan Stanley and other advisors to help fend off potential activist investors, according to CNBC. Intel is also seeing several billions from a pair of lucrative contracts announced last week. The Department of Defense and Department of Commerce announced Intel had been awarded up to $3 billion in direct funding under a part of the Chips Act known as the Secure Enclave, which is meant to expand manufacturing of cutting-edge chips for the U.S. government. Also last week, Intel and Amazon Web Services (AMZN) announced a multi-year, multi-billion-dollar collaboration to advance U.S.-based chipmaking in Ohio. David Dietze, senior investment strategist at Peapack Private Wealth Management (PGC), previously told Quartz that the AWS partnership and additional federal funding could mark the beginning of a turnaround for Intel.

Intel doesn't need a takeover, it needs a turnaround: Dave Lee

Aside from the simple question of how Qualcomm would actually pay for it, there are other huge hurdles, particularly concerning regulatory approval. The merger of two huge US chip companies with a combined market value of $283 billion isn't something that will be allowed to happen quickly -- if at all.They say if there's ever a Silicon Valley Mount Rushmore, the first face to be chiseled into the stone would be that of Gordon Moore. The Intel Corp. co-founder's famous prediction about the rate at which semiconductors would improve has provided the bedrock to American technology leadership. Such sentimentality around Intel and its unparalleled contribution to the computing revolution is what makes any suggestion of a takeover a huge story. The approach by Qualcomm Inc., reported late last week, comes as Intel faces the toughest period in its 56-year history. In its weakened state -- shares are down 53% this year -- it is vulnerable to the disruptive effects of window-shopping by rivals that are currently more prosperous. Intel Chief Executive Officer Pat Gelsinger should tune out the noise and stick to his turnaround strategy. Most analysts consider the deal unlikely to progress much further. Aside from the simple question of how Qualcomm would actually pay for it, there are other huge hurdles, particularly concerning regulatory approval. The merger of two huge US chip companies with a combined market value of $283 billion isn't something that will be allowed to happen quickly -- if at all. We also know little of the precise nature of Qualcomm's interest. Reports a month ago suggested the company was most keen on buying Intel's chip-design arm but not the manufacturing business. That wouldn't be surprising: Intel's chips still do well in the PC sector and also in data servers, which would complement Qualcomm's position in the mobile market and give it a quick market share boost. In contrast, taking on chip foundries would be a huge burden -- they are extremely expensive, and Intel's plans still require billions of dollars of investment if it's to regain ground lost to Taiwan Semiconductor Manufacturing Co. That's why the more recent reports suggesting Qualcomm might want to buy Intel in its entirety has analysts scratching their heads. Why would Qualcomm make Intel's huge challenges its own? Meanwhile, Qualcomm's reported pitch of an "all-American" merger to US regulators has some merit -- this is about remaining competitive globally -- but that ignores how other regions would view the union of two of the world's largest chipmakers, even with Intel in its distressed state. The saga of Intel's struggles has become just as famous as its origin story. Its early dominance in PCs led to complacency; the company famously turned down the chance to develop a chip for the iPhone. Then it allowed its manufacturing abilities to fall behind those of TSMC. Now Intel is trailing the likes of Nvidia Corp. and others on artificial intelligence. This year, Intel is on course for a third consecutive year of declining revenue. Such is the cost of missed opportunities. But the story isn't over. Revenue growth is projected to return in 2025 as Gelsinger's turnaround plan starts to bear fruit. It includes cutbacks, with 15,000 employees losing their jobs, and delays in factory construction in Germany and Poland, perhaps indefinite. More significant, the company is spinning out its foundry business to make it more appealing to the fabless chipmakers, which now turn to TSMC when they want their designs manufactured. Detailed in full for the first time last week, Gelsinger's good ideas received investor approval as a strong -- if expensive -- strategy to claw back some of the ground Intel has lost over the past two decades. An "equity-like" investment offer of up to $5 billion from Apollo Global Management, first reported on Sunday by Bloomberg, would be further incentive for Intel to stay on track rather than let itself be sold for parts. There are glimmers of momentum. Last week, Intel and Amazon.com Inc. announced they had reached a deal for Intel's foundry to make custom AI chips for Amazon Web Services, the world's largest cloud-computing provider. The deal in itself won't resurrect Intel's fortunes, noted analyst Ben Thompson, but it could form the basis for a long-running and lucrative partnership in the blossoming AI industry. Intel has also said that it could be in line for $3 billion from the US government to make chips for the so-called Secure Enclave, a defense and intelligence project. This gets to the heart of why Intel's turnaround is so important. The goals of the US Chips and Science Act, to reduce chip supply-chain exposure to the whims of China, rests significantly on Intel being nursed back to health -- which is why the company has been earmarked for some $8.5 billion in grants and subsidies. The national interest is best served by an Intel nursed back to strength. Disruption from a possible takeover would slow down this vital work. Rebuilding US chipmaking capability is already taking long enough. Gelsinger's time, then, is best spent executing on his plan and building a client base for the foundry business. As he said in a Bloomberg interview recently: "I need lots of customers." Quite. What he doesn't need, it's clear, is a buyer.

Confused about the potential Qualcomm-Intel deal? Here's why it matters even if it doesn't happen.

Qualcomm's potential bid for Intel would feature plenty of zeros, but one massive question is the real hold-up: How is this going to work? With both companies' sizable market caps -- Qualcomm's is nearly $185 billion; Intel's is more than $96 billion -- talks of a deal were bound to turn heads. But industry experts have gone from turning their heads to scratching them trying to make sense of the potential tie-up. Bernstein's team of chip analysts didn't mince words, writing it "would prefer that Qualcomm not pursue this as it seems very risky to us given uncertain returns." So what's the issue? Let's break it all down. Why is everyone doubting this Qualcomm-Intel deal? The big hangup is that Intel designs and manufactures chips. No one is quite sure how the latter half of the business fits into Qualcomm, which only designs chips. Wait, isn't it a good thing Intel can do both? It used to be, but not anymore. Nowadays, chip companies typically focus on one or the other. Some companies design chips (Nvidia). Only a few manufacture them (TSMC mostly). If anything, doing both has actually hurt, not helped, Intel in recent years. Along with some other bad strategic decisions. I'm still confused. TSMC's pure manufacturing focus has helped it get very good at what is an incredibly complex process. It works with a bunch of different players, while Intel only really manufactures its own chip designs. Getting all that varied experience has proved particularly beneficial for TSMC in the age of cutting-edge mobile and AI chips. It's so good now that even Intel has TSMC make a few of its designs -- the ultimate victory. So Intel is mid at manufacturing chips? Sighs Sure. It used to be the best, now it's probably third. If that's the case, why can't Qualcomm just ditch the factories as part of the deal? That is indeed the likely plan. The US needs Intel to keep (and get better at) manufacturing chips. Having the world's most dominant chip manufacturer, TSMC, be based in Taiwan isn't great. If China decides to invade the island, our chip supply is in major trouble. Why is Qualcomm even reportedly considering buying Intel? Intel is still very good at designing chips for PCs and servers, the computers that go in data centers. These businesses would complement Qualcomm's existing offerings well. Qualcomm would probably then sell Intel's manufacturing operations to another buyer. The problem with that is that this manufacturing business would have almost no customers, and would fall even further behind TSMC. Does Intel have any other options? Intel's manufacturing capabilities might be a hangup to this deal, but they're why so many people want to see the company survive and thrive. After news of the Qualcomm talks broke, a report followed about PE giant Apollo's interest in investing up to $5 billion in Intel. So how does this all end? Experts seem incredibly skeptical about a Qualcomm deal going through. But this entire episode highlights important questions about the US' chip-manufacturing abilities, or lack thereof. As for Intel, the company already committed to making big changes, so with or without Qualcomm, expect some upheaval. The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Jack Sommers, deputy editor, in London. Milan Sehmbi, fellow, in London. Amanda Yen, fellow, in New York.

Apollo to Offer Multibillion-Dollar Investment in Intel

(Bloomberg) -- Apollo Global Management Inc. has offered to make a multibillion-dollar investment in Intel Corp., according to people familiar with the matter, in a move that would be a vote of confidence in the chipmaker's turnaround strategy. The alternative asset manager has indicated in recent days it would be willing to make an equity-like investment of as much as $5 billion in Intel, said one of the people, who asked not to be identified discussing confidential information. Intel executives have been weighing Apollo's proposal, the people said. The size of Apollo's potential investment could change or discussions could fall apart, they said. The development comes after San Diego-based Qualcomm Inc. floated a friendly takeover of Intel, people with knowledge of the matter said on Saturday, raising the prospect of one of the biggest-ever M&A deals. Neither deal has been finalized. Representatives for Apollo and Intel declined to comment. Under Chief Executive Officer Pat Gelsinger, Intel has been working on an expensive plan to remake itself and bring in new products, technology and outside customers. Still, the company is headed for its third consecutive year of shrinking sales and its shares have lost more than 50% of their value this year. While Apollo may best be known today for its insurance, buyout and credit strategies, the firm started out in the 1990s as a distressed-investing specialist. Intel's shares rose about 2% in premarket trading before New York markets opened on Monday. The stock had closed 3.3% higher at $21.84 on Friday, giving the company a market value of $93.4 billion. The company's shares bounced last week after Gelsinger made a series of announcements to accelerate the turnaround. Those included a multibillion-dollar deal with Amazon.com Inc.'s Amazon Web Services cloud unit to co-invest in a custom AI semiconductor and a plan to turn its ailing manufacturing business into a wholly owned subsidiary. Intel also said it would pull back on some projects, including shelving plans for new factories in Germany and Poland for now. Intel and Apollo already have a relationship. Santa Clara, California-based Intel agreed in June to sell a stake in a joint venture that controls a plant in Ireland for $11 billion to Apollo, bringing in more external funding for a massive expansion of its factory network. Apollo also has other experience in the chipmaking space. Last year, the New York-based firm agreed to lead a $900 million investment in Western Digital Corp., buying convertible preferred stock. --With assistance from Shadab Nazmi and Yasufumi Saito. (Updates with premarket share trading in sixth paragraph, adds additional details throughout.)

Report: Apollo Global Management Offers $5 Billion Investment in Intel | PYMNTS.com

The size of the potential investment could change, or the talks could come to nothing, according to the report. Neither Apollo Global Management nor Intel immediately replied to PYMNTS' request for comment. The investment would provide Intel with an alternative to a potential takeover by rival chipmaker Qualcomm, which has floated the idea of a friendly takeover, per the report. Apollo and Intel have an existing relationship, following Apollo's June purchase of an $11 billion stake in a joint venture that controls a chip plant in Ireland, according to the report. Intel's sales have been shrinking, and its shares have lost half their value this year, the report said. The shares rose last week after Intel CEO Pat Gelsinger announced a deal with Amazon Web Services (AWS) to co-invest in a custom artificial intelligence semiconductor, a plan to turn Intel's manufacturing business into a wholly owned subsidiary, and a pause to plans to build new factories in Germany and Poland, per the report. A combination of Intel with Qualcomm or another competitor would likely face regulatory scrutiny, according to the report. It was reported Friday (Sept. 20) that Qualcomm initiated discussions with Intel about a potential acquisition. The talks were in their early stages, and Qualcomm has not submitted a formal offer. If the acquisition attempt moves forward, it could mark one of the largest in tech history. In 2018, chipmaker Broadcom sought to acquire Qualcomm for $142 billion, but that deal was ultimately blocked by then-President Donald Trump due to national security concerns. In June, Intel introduced a next-generation AI chip, the Xeon 6 processor, promising a combination of enhanced performance and power efficiency to tackle the demands of data center workloads. "AI is driving one of the most consequential eras of innovation the industry has ever seen," Gelsinger said at the time. "The magic of silicon is once again enabling exponential advancements in computing that will push the boundaries of human potential and power the global economy for years to come."

Report: Intel mulls $5B investment offer from private equity firm Apollo - SiliconANGLE

Report: Intel mulls $5B investment offer from private equity firm Apollo The private equity firm Apollo Global Management Inc. is reportedly planning to make a multibillion dollar investment in Intel Corp., suggesting confidence in the troubled chipmaker's recently announced turnaround strategy. In a report on Sunday, Bloomberg cited a person familiar with the matter as saying Apollo is willing to make an "equity-like" investment of up to $5 billion in the semiconductor giant. The proposed investment comes at a pivotal moment for Intel, which was once the world's most dominant chipmaker but has since fallen on hard times, with its shares losing almost 60% of their value since the start of the year. Intel executives are said to be mulling Apollo's proposal, Bloomberg said. Discussions over the deal are still at an early stage, and the details are yet to be finalized. The size of the investment could yet change, and it remains possible that nothing will be agreed, the source told Bloomberg. There is a recent precedent for the deal. Earlier this year, Apollo gave Intel $11 billion to acquire a 49% stake in the company's Fab 34 chip manufacturing facility in Leixlip, Ireland, in a deal that would help fund the ongoing development of the site, officials said at the time. The news comes just days after it was reported that Qualcomm Inc. has also approached Intel, proposing what could become one of the largest acquisitions in the history of the technology industry. The Wall Street Journal said Friday that Qualcomm is looking to buy Intel, which has a market capitalization of over $93 million, outright. It's very far from certain that a deal could be reached, and there would be numerous regulatory hurdles to overcome, the report added. If the deal were to go ahead, Qualcomm would reportedly look to sell off a number of Intel's business units, including its new foundry business. Intel's fortunes have dwindled over the last five years or so, thanks in part to its failure to anticipate the rise of artificial intelligence and also because of the emergence of Advanced Micro Devices Inc. as a major competitor in its traditional server and personal computer chip businesses. In fiscal 2023, Intel's chipmaking business racked up operating losses of more than $7 billion, and in its most recent earnings call, it disappointed investors with results that came in below expectations. The company has responded by making some drastic changes to its business. One month ago, the chipmaker announced it will lay off 15,000 workers in its largest-ever round of job cuts. Then last week, it announced a plan to spin off the new Intel Foundry unit as a separate business with its own, independent financial structure, ahead of a possible sale in the years to come.

Why Intel Stock Jumped Today | The Motley Fool

Is an institutional investor gearing up to make a big bet on Intel? Intel (INTC 3.30%) stock gained ground Monday following reports that Apollo Global Management is interested in making a big investment in the company. The semiconductor specialist's share price closed out the daily session up 3.3%. Shares had been up as much as 4.5% earlier in the day. On Sunday, Bloomberg published a report stating that Apollo was interested in investing as much as $5 billion in Intel. The news followed reports published last Friday that Qualcomm was interested in acquiring parts of Intel's business or pursuing a full-on merger. Intel's business has been struggling as it aims to fend off competition, gain ground in artificial intelligence (AI), and build up its third-party chip fabrication business. Along with worse-than-expected earnings and forward guidance, the second-quarter report published by the company in August arrived with news that the company is pursuing major restructuring initiatives and plans to lay off 15% of its global workforce. At the same time, the company is also facing the need to make big investments if it hopes to be a real player in AI and improve and ramp up its fabrication capabilities. Amid rising uncertainty surrounding the company's future, reports have emerged that Intel could sell off some of its businesses or even wind up fully being taken over by Qualcomm. The report that Intel could receive substantial investment from Apollo suggests that the semiconductor company still has multiple options at its disposal, and investors bid up its share price in response. Intel's path forward remains uncertain, and there's a good chance that the stock will continue to see significant swings as new reports and speculation about the company's future emerge. While Intel's share price could surge if Qualcomm acquires the company, there could be regulatory roadblocks, valuation concerns, and other factors that would prevent a potential combination. Right now, it looks more likely that Intel will seek new funding from outside investors and public sector sources or sell off pieces of its business. The company's stock could get a boost if initiatives along these lines are successful, but the business' long-term outlook remains complicated and is shrouded by uncertainty.

Apollo Plans To Invest $5 Billion In Intel: Reports

Apollo Global Management, a U.S.-based asset management company, is reportedly planning to invest $5 billion in Intel. The company wants to put in an equity-like investment in Intel, Bloomberg reported Sunday, citing a person in knowledge of the matter. The development comes as Intel has been struggling since the start of the year, having lost almost 60% of the value of its shares. The chipmaker recently announced major job cuts amid fierce competition, particularly from Nvidia, in the race to develop cutting-edge chips for artificial intelligence. However, the potential investment would be welcome news for the chipmaker, which was once touted as the most valuable in the world. According to Bloomberg, Intel's executives are currently evaluating Apollo's proposal, and negotiations remain in the early stages. As of writing, no agreement was finalized between the parties. The report also noted that the investment figure could still change, and talks for a potential deal may not reach fruition. Earlier this year, Apollo revealed that it would be acquiring a 49% equity interest of $11 billion in a joint venture pertaining to Intel's new manufacturing facility in Ireland. The news about the new investment deal with Intel comes following reports that Qualcomm is considering acquiring Intel. Qualcomm is also said to be exploring options to acquire portions of Intel's design business, particularly its PC design unit. In a bid to cope with a slump in its business, Intel recently said that it had signed new contracts. Earlier this month, the chipmaker said that Amazon would use its foundry to build at least two chips for its Amazon Web Services unit. The Silicon Valley giant had also revealed that it secured up to $3 billion in investment from the Biden administration to boost its manufacturing of advanced semiconductors for the U.S. military. Last month, Intel reported a net loss of $1.6 billion, or 38 cents per share, during the second quarter of 2024, compared to income of $1.5 billon, or 35 cents per share, during the same period last year. The company had announced $10 billion in spending cuts that would save $10 billion by laying off 15% of its workforce, about 17,500 employees, and suspending dividend payments starting in the fourth quarter of 2024. It also issued a weaker-than-expected forecast for the third quarter.