Qualcomm's Potential Intel Buyout: Antitrust and Foundry Concerns Loom Large

Qualcomm's potential Intel buyout could raise antitrust, foundry concerns

A potential deal to buy Intel could accelerate Qualcomm's diversification but will burden the smartphone chipmaker with a loss-making semiconductor manufacturing unit that it may struggle to turn around or sell, analysts said. A buyout will also face tough antitrust scrutiny globally as it would unite two crucial chip firms in what would be the sector's biggest ever deal, creating a behemoth with a strong share of the smartphone, personal computer and server markets. Shares of Intel rose nearly 3% on Monday, after media reports late on Friday about Qualcomm's early-stage approach for the struggling chipmaker. Qualcomm's shares were down 1.8%. "The rumored deal between Qualcomm and Intel is intriguing on many levels and, from a pure product perspective, makes a certain degree of sense as they have a number of complementary product lines," said TECHnalysis Research founder Bob O'Donnell. Qualcomm approached Intel about a takeover in recent days: Report "The reality of it actually occurring, however, is very low. Plus, it is unlikely Qualcomm would want all of Intel and trying to break apart the product business from the foundry business right now just would not be possible," he said. Once the dominant force in the semiconductor industry, five-decade-old Intel is facing one of its worst periods as losses mount at the contract manufacturing unit it is building out in hopes of challenging TSMC. Intel's market value has fallen below $100 billion for the first time in three decades as the company has missed out on the generative AI boom after passing on an OpenAI investment. As of last close, its market capitalization was less than half that of potential suitor Qualcomm, which has a value of about $190 billion. Considering Qualcomm had around $7.77 billion in cash and cash equivalents as of June 23, analysts expect the deal will mostly be funded through stock and would be highly dilutive for Qualcomm's investors, likely raising some apprehension. Qualcomm, which also supplies to Apple, has quickened its efforts to expand beyond its mainstay smartphone business with chips for industries including automotive and PCs under CEO Cristiano Amon. But it still remains overly reliant on the mobile market, which has struggled in recent years due to the post-pandemic demand slump. Amon is personally involved in the Intel negotiations and has been examining various options for a deal for the company, sources have told Reuters. This is not the first time Qualcomm is pursing a large acquisition. It had offered to buy rival NXP Semiconductors for $44 billion in 2016, but abandoned the bid two years later after failing to secure a nod from Chinese regulators. FOUNDRY CONUNDRUM While Intel designs and manufacturers its chips that power personal computers and data centers, Qualcomm has never operated a chip factory. It uses contract manufacturers such as TSMC and designs and other technology supplied by Arm Holdings. Qualcomm lacks the experience needed to ramp up Intel's fledgling foundry business, which recently named Amazon.com as its first major customer, according to analysts. "We do not know why Qualcomm would be a better owner for those assets," said Stacy Rasgon of Bernstein. "We do not really see a scenario without them either; we do not think anyone else would really want to run them and believe scrapping them is unlikely to be politically viable," he added. Intel's foundry business is seen as crucial to Washington's goal of growing domestic chip manufacturing. The company has secured about $19.5 billion in federal grants and loans under the CHIPS Act to build and expand factories across four U.S. states. Some analysts said Intel would prefer outside investments instead of a sale, pointing to a recent move to make the foundry business more independent. Bloomberg News reported over the weekend that Apollo Global Management, already a partner in Intel's Ireland facility, has offered an investment of as much as $5 billion in the company. Qualcomm could also decide to buy parts of Intel's business, instead of the entire company. Reuters had reported earlier this month that it had particular interest in Intel's PC design unit. Published - September 24, 2024 10:04 am IST Read Comments

Qualcomm's potential Intel buyout could raise antitrust, foundry concerns

(Reuters) - A potential deal to buy Intel could accelerate Qualcomm's diversification but will burden the smartphone chipmaker with a loss-making semiconductor manufacturing unit that it may struggle to turn around or sell, analysts said. A buyout will also face tough antitrust scrutiny globally as it would unite two crucial chip firms in what would be the sector's biggest ever deal, creating a behemoth with a strong share of the smartphone, personal computer and server markets. Shares of Intel rose 3% before the bell on Monday, after media reports late on Friday about Qualcomm's early-stage approach for the struggling chipmaker. Qualcomm's shares were lower. "The rumored deal between Qualcomm and Intel is intriguing on many levels and, from a pure product perspective, makes a certain degree of sense as they have a number of complementary product lines," said TECHnalysis Research founder Bob O'Donnell. "The reality of it actually occurring, however, is very low. Plus, it is unlikely Qualcomm would want all of Intel and trying to break apart the product business from the foundry business right now just would not be possible," he said. Once the dominant force in the semiconductor industry, five-decade-old Intel is facing one of its worst periods as losses mount at the contract manufacturing unit it is building out in hopes of challenging TSMC. Intel's market value has fallen below $100 billion for the first time in three decades as the company has missed out on the generative AI boom after passing on an OpenAI investment. As of last close, its market capitalization was less than half that of potential suitor Qualcomm, which has a value of about $190 billion. Considering Qualcomm had around $7.77 billion in cash and cash equivalents as of June 23, analysts expect the deal will mostly be funded through stock and would be highly dilutive for Qualcomm's investors, likely raising some apprehension. Qualcomm, which also supplies to Apple, has quickened its efforts to expand beyond its mainstay smartphone business with chips for industries including automotive and PCs under CEO Cristiano Amon. But it still remains overly reliant on the mobile market, which has struggled in recent years due to the post-pandemic demand slump. Amon is personally involved in the Intel negotiations and has been examining various options for a deal for the company, sources have told Reuters. This is not the first time Qualcomm is pursing a large acquisition. It had offered to buy rival NXP Semiconductors for $44 billion in 2016, but abandoned the bid two years later after failing to secure a nod from Chinese regulators. FOUNDRY CONUNDRUM While Intel designs and manufacturers its chips that power personal computers and data centers, Qualcomm has never operated a chip factory. It uses contract manufacturers such as TSMC and designs and other technology supplied by Arm Holdings. Qualcomm lacks the experience needed to ramp up Intel's fledgling foundry business, which recently named Amazon.com as its first major customer, according to analysts. "We do not know why Qualcomm would be a better owner for those assets," said Stacy Rasgon of Bernstein. "We do not really see a scenario without them either; we do not think anyone else would really want to run them and believe scrapping them is unlikely to be politically viable," he added. Intel's foundry business is seen as crucial to Washington's goal of growing domestic chip manufacturing. The company has secured about $19.5 billion in federal grants and loans under the CHIPS Act to build and expand factories across four U.S. states. Some analysts said Intel would prefer outside investments instead of a sale, pointing to a recent move to make the foundry business more independent. Bloomberg News reported over the weekend that Apollo Global Management, already a partner in Intel's Ireland facility, has offered an investment of as much as $5 billion in the company. Qualcomm could also decide to buy parts of Intel's business, instead of the entire company. Reuters had reported earlier this month that it had particular interest in Intel's PC design unit. (Reporting by Aditya Soni and Yuvraj Malik in Bengaluru; additional reporting by Juby Babu in Mexico City and Seher Dareen and Utkarsh Shetti in Bengaluru; Editing by Sriraj Kalluvila)

Qualcomm's potential Intel buyout could raise antitrust, foundry concerns

"The rumored deal between Qualcomm and Intel is intriguing on many levels and, from a pure product perspective, makes a certain degree of sense as they have a number of complementary product lines," said TECHnalysis Research founder Bob O'Donnell.A potential deal to buy Intel could accelerate Qualcomm's diversification but will burden the smartphone chipmaker with a loss-making semiconductor manufacturing unit that it may struggle to turn around or sell, analysts said. A buyout will also face tough antitrust scrutiny globally as it would unite two crucial chip firms in what would be the sector's biggest ever deal, creating a behemoth with a strong share of the smartphone, personal computer and server markets. Shares of Intel rose 3% before the bell on Monday, after media reports late on Friday about Qualcomm's early-stage approach for the struggling chipmaker. Qualcomm's shares were lower. "The rumored deal between Qualcomm and Intel is intriguing on many levels and, from a pure product perspective, makes a certain degree of sense as they have a number of complementary product lines," said TECHnalysis Research founder Bob O'Donnell. "The reality of it actually occurring, however, is very low. Plus, it is unlikely Qualcomm would want all of Intel and trying to break apart the product business from the foundry business right now just would not be possible," he said. Once the dominant force in the semiconductor industry, five-decade-old Intel is facing one of its worst periods as losses mount at the contract manufacturing unit it is building out in hopes of challenging TSMC. Intel's market value has fallen below $100 billion for the first time in three decades as the company has missed out on the generative AI boom after passing on an OpenAI investment. As of last close, its market capitalization was less than half that of potential suitor Qualcomm, which has a value of about $190 billion. Considering Qualcomm had around $7.77 billion in cash and cash equivalents as of June 23, analysts expect the deal will mostly be funded through stock and would be highly dilutive for Qualcomm's investors, likely raising some apprehension. Qualcomm, which also supplies to Apple, has quickened its efforts to expand beyond its mainstay smartphone business with chips for industries including automotive and PCs under CEO Cristiano Amon. But it still remains overly reliant on the mobile market, which has struggled in recent years due to the post-pandemic demand slump. Amon is personally involved in the Intel negotiations and has been examining various options for a deal for the company, sources have told Reuters. This is not the first time Qualcomm is pursing a large acquisition. It had offered to buy rival NXP Semiconductors for $44 billion in 2016, but abandoned the bid two years later after failing to secure a nod from Chinese regulators. FOUNDRY CONUNDRUM While Intel designs and manufacturers its chips that power personal computers and data centers, Qualcomm has never operated a chip factory. It uses contract manufacturers such as TSMC and designs and other technology supplied by Arm Holdings. Qualcomm lacks the experience needed to ramp up Intel's fledgling foundry business, which recently named Amazon.com as its first major customer, according to analysts. "We do not know why Qualcomm would be a better owner for those assets," said Stacy Rasgon of Bernstein. "We do not really see a scenario without them either; we do not think anyone else would really want to run them and believe scrapping them is unlikely to be politically viable," he added. Intel's foundry business is seen as crucial to Washington's goal of growing domestic chip manufacturing. The company has secured about $19.5 billion in federal grants and loans under the CHIPS Act to build and expand factories across four U.S. states. Some analysts said Intel would prefer outside investments instead of a sale, pointing to a recent move to make the foundry business more independent. Bloomberg News reported over the weekend that Apollo Global Management, already a partner in Intel's Ireland facility, has offered an investment of as much as $5 billion in the company. Qualcomm could also decide to buy parts of Intel's business, instead of the entire company. Reuters had reported earlier this month that it had particular interest in Intel's PC design unit. (Reporting by Aditya Soni and Yuvraj Malik in Bengaluru; additional reporting by Juby Babu in Mexico City and Seher Dareen and Utkarsh Shetti in Bengaluru; Editing by Sriraj Kalluvila)

Qualcomm's potential Intel buyout could raise antitrust, foundry concerns

A potential deal to buy Intel could accelerate Qualcomm's diversification but will burden the smartphone chipmaker with a loss-making semiconductor manufacturing unit that it may struggle to turn around or sell, analysts said. A buyout will also face tough antitrust scrutiny globally as it would unite two crucial chip firms in what would be the sector's biggest ever deal, creating a behemoth with a strong share of the smartphone, personal computer and server markets. Shares of Intel rose 3 per cent before the bell on Monday, after media reports late on Friday about Qualcomm's early-stage approach for the struggling chipmaker. Qualcomm's shares were lower. "The rumoured deal between Qualcomm and Intel is intriguing on many levels and, from a pure product perspective, makes a certain degree of sense as they have a number of complementary product lines," said TECHnalysis Research founder Bob O'Donnell. Also read: Qualcomm accelerating efforts to bring GenAI capabilities to Edge devices, says company's India head Savi Soin "The reality of it actually occurring, however, is very low. Plus, it is unlikely Qualcomm would want all of Intel and trying to break apart the product business from the foundry business right now just would not be possible," he said. Once the dominant force in the semiconductor industry, five-decade-old Intel is facing one of its worst periods as losses mount at the contract manufacturing unit it is building out in hopes of challenging TSMC. Intel's market value has fallen below $100 billion for the first time in three decades as the company has missed out on the generative AI boom after passing on an OpenAI investment. As of last close, its market capitalisation was less than half that of potential suitor Qualcomm, which has a value of about $190 billion. Also read: Qualcomm launches Chennai design centre with ₹177 crore investment Considering Qualcomm had around $7.77 billion in cash and cash equivalents as of June 23, analysts expect the deal will mostly be funded through stock and would be highly dilutive for Qualcomm's investors, likely raising some apprehension. Qualcomm, which also supplies to Apple, has quickened its efforts to expand beyond its mainstay smartphone business with chips for industries including automotive and PCs under CEO Cristiano Amon. But it still remains overly reliant on the mobile market, which has struggled in recent years due to the post-pandemic demand slump. Amon is personally involved in the Intel negotiations and has been examining various options for a deal for the company, sources have told Reuters. This is not the first time Qualcomm is pursing a large acquisition. It had offered to buy rival NXP Semiconductors for $44 billion in 2016, but abandoned the bid two years later after failing to secure a nod from Chinese regulators. Foundry conundrum While Intel designs and manufacturers its chips that power personal computers and data centers, Qualcomm has never operated a chip factory. It uses contract manufacturers such as TSMC and designs and other technology supplied by Arm Holdings. Qualcomm lacks the experience needed to ramp up Intel's fledgling foundry business, which recently named Amazon.com as its first major customer, according to analysts. "We do not know why Qualcomm would be a better owner for those assets," said Stacy Rasgon of Bernstein. "We do not really see a scenario without them either; we do not think anyone else would really want to run them and believe scrapping them is unlikely to be politically viable," he added. Intel's foundry business is seen as crucial to Washington's goal of growing domestic chip manufacturing. The company has secured about $19.5 billion in federal grants and loans under the CHIPS Act to build and expand factories across four U.S. states. Some analysts said Intel would prefer outside investments instead of a sale, pointing to a recent move to make the foundry business more independent. Bloomberg News reported over the weekend that Apollo Global Management, already a partner in Intel's Ireland facility, has offered an investment of as much as $5 billion in the company. Qualcomm could also decide to buy parts of Intel's business, instead of the entire company. Reuters had reported earlier this month that it had particular interest in Intel's PC design unit. SHARE Copy linkEmailFacebookTwitterTelegramLinkedInWhatsAppRedditPublished on September 24, 2024

Qualcomm's potential Intel buyout could raise antitrust, foundry concerns

Shares of Intel rose 3% before the bell on Monday, after media reports late on Friday about Qualcomm's early-stage approach for the struggling chipmaker. Qualcomm's shares were lower. "The rumored deal between Qualcomm and Intel is intriguing on many levels and, from a pure product perspective, makes a certain degree of sense as they have a number of complementary product lines," said TECHnalysis Research founder Bob O'Donnell. "The reality of it actually occurring, however, is very low. Plus, it is unlikely Qualcomm would want all of Intel and trying to break apart the product business from the foundry business right now just would not be possible," he said. Once the dominant force in the semiconductor industry, five-decade-old Intel is facing one of its worst periods as losses mount at the contract manufacturing unit it is building out in hopes of challenging TSMC. Intel's market value has fallen below $100 billion for the first time in three decades as the company has missed out on the generative AI boom after passing on an OpenAI investment. As of last close, its market capitalization was less than half that of potential suitor Qualcomm, which has a value of about $190 billion. Considering Qualcomm had around $7.77 billion in cash and cash equivalents as of June 23, analysts expect the deal will mostly be funded through stock and would be highly dilutive for Qualcomm's investors, likely raising some apprehension. Qualcomm, which also supplies to Apple, has quickened its efforts to expand beyond its mainstay smartphone business with chips for industries including automotive and PCs under CEO Cristiano Amon. But it still remains overly reliant on the mobile market, which has struggled in recent years due to the post-pandemic demand slump. Amon is personally involved in the Intel negotiations and has been examining various options for a deal for the company, sources have told Reuters. This is not the first time Qualcomm is pursing a large acquisition. It had offered to buy rival NXP Semiconductors for $44 billion in 2016, but abandoned the bid two years later after failing to secure a nod from Chinese regulators. FOUNDRY CONUNDRUM While Intel designs and manufacturers its chips that power personal computers and data centers, Qualcomm has never operated a chip factory. It uses contract manufacturers such as TSMC and designs and other technology supplied by Arm Holdings. Qualcomm lacks the experience needed to ramp up Intel's fledgling foundry business, which recently named Amazon.com as its first major customer, according to analysts. "We do not know why Qualcomm would be a better owner for those assets," said Stacy Rasgon of Bernstein. "We do not really see a scenario without them either; we do not think anyone else would really want to run them and believe scrapping them is unlikely to be politically viable," he added. Intel's foundry business is seen as crucial to Washington's goal of growing domestic chip manufacturing. The company has secured about $19.5 billion in federal grants and loans under the CHIPS Act to build and expand factories across four U.S. states. Some analysts said Intel would prefer outside investments instead of a sale, pointing to a recent move to make the foundry business more independent. Bloomberg News reported over the weekend that Apollo Global Management, already a partner in Intel's Ireland facility, has offered an investment of as much as $5 billion in the company. Qualcomm could also decide to buy parts of Intel's business, instead of the entire company. Reuters had reported earlier this month that it had particular interest in Intel's PC design unit. (Reporting by Aditya Soni and Yuvraj Malik in Bengaluru; additional reporting by Juby Babu in Mexico City and Seher Dareen and Utkarsh Shetti in Bengaluru; Editing by Sriraj Kalluvila)

Qualcomm has good reasons to bid for Intel -- but a takeover probably won't happen

This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in. Qualcomm is no newbie in Silicon Valley. It was founded 39 years ago, in 1985. Since then, it has grown into a company worth over $188 billion, specializing in everything from wireless networks to smartphone processors and modems. But recent trouble brewing at Intel, a longtime chip designer and manufacturer, has apparently given Qualcomm reason to consider acquiring a company that has lost more than half its value this year and dropped to a market capitalization of just over $93 billion. While some of its top competitors, like Nvidia, have soared to new heights as a result of the generative AI boom, Intel has struggled to capitalize on investor interest in the technology. It has also grappled with production and strategy challenges. The company took a serious tumble in August -- a month in which it lost almost $30 billion in market value -- after announcing layoffs affecting 15,000 employees and a suspension of its dividend from the fourth quarter of this year. It's worth noting that Qualcomm's talks to takeover this troubled business are very early-stage and exploratory in nature. A person close to Qualcomm told the Financial Times that the company "would only pursue a friendly deal." For some, the logic to pursue the deal here is apparent. Speaking on CNBC last week, industry analyst Patrick Moorhead said Intel's exposure to key areas like data centers, the PC market, and chip manufacturing capabilities -- which Qualcomm lacks as it outsources that process to Taiwan's TSMC -- means there are "synergies in this." The company has also taken steps that seem to make it a more attractive purchase. Intel's CEO Pat Gelsinger also announced a set of drastic measures to bring change to the company last week that could set it on a brighter path. These measures included a "multi-year, multibillion-dollar" deal to work on custom chip designs with tech heavyweight Amazon Web Services, pauses on plans to build plants in Europe, and separating its manufacturing unit, Intel Foundry, into its own entity. That said, not everyone is convinced that Qualcomm needs Intel -- or that a buyout would be a good idea for either company. Richard Windsor, an equity research analyst and founder of Radio Free Mobile, thinks that while "it is possible to see how Qualcomm and Intel could fit together" -- one company designs chips and the other has factories -- lots of Intel's bits won't fit so well. "The vultures are hovering around Intel and while Intel will make a tasty and nutritious meal for some, I think Intel would end up sticking in Qualcomm's crop and give it a bad case of indigestion," he wrote in a note on Monday. He points to a few key reasons. Intel's x86 processors lag behind Qualcomm's and rival firm Arm's offerings. Redesigning chips to be made by Intel "sounds like a risky proposition," he said, given Qualcomm's "already established excellent relationships" with manufacturers like TSMC. Ming-Chi Kuo, a Taiwan-based market analyst at financial services firm TF International Securities, went a step further, claiming a takeover of Intel could be "disastrous" for Qualcomm in a post over the weekend. His rationale was that Qualcomm's "most critical focus should be on establishing competitiveness in AI chips" for segments like smartphones, but he doesn't see an acquisition of Intel helping. It could boost its position in the market for AI PCs, but the analyst thinks Qualcomm already has a strong position here, as its processors are being used in Microsoft's Windows on Arm platform -- a version of Windows running on Arm technology that Microsoft is committed to. "While the acquisition of Intel could rapidly increase Qualcomm's PC market share, it comes at a significant cost," he wrote. "Qualcomm can grow in the AI PC market even without the acquisition." It's also unclear how Qualcomm would find the cash to buy Intel. The company's cash on hand is $13 billion, but even adding in free cash flow, it still falls far short of Intel's current price. The impact on competition would likely spark alarm among regulators, too. A Qualcomm bid for Intel could face similar regulatory obstacles to the takeover attempt Nvidia made for Arm in 2020 and later abandoned in 2022. Intel will, of course, want to consider its options. Bloomberg reported on Sunday that a new option was on the table after investment giant Apollo offered to make a "multi-billion-dollar investment" in the company. For Intel's Gelsinger, that could offer the chip firm some vital capital to see through its new plans an help it stand on its own two feet.

Qualcomm Reaches Out To Intel About a Takeover: All Details - News18

Qualcomm has in recent days approached Intel to explore a potential acquisition of the troubled chipmaker, a source familiar with the situation said on Friday, in what could be a transformational deal in the sector but faces many hurdles. SAN FRANCISCO:Qualcomm has in recent days approached Intel to explore a potential acquisition of the troubled chipmaker, a source familiar with the situation said on Friday, in what could be a transformational deal in the sector but faces many hurdles. Qualcomm CEO Cristiano Amon is personally involved in the negotiations to acquire five-decade-old Intel, according to the source who was briefed on the matter. Another person familiar with the situation said Amon has been actively examining various options for a deal for the company. Earlier this month, Reuters reported that Qualcomm explored the possibility of acquiring portions of Intel's design business and that its PC design unit was of particular interest. Qualcomm executives were examining Intel's entire portfolio of businesses. The conversations with Intel are at an early stage. The San Diego-based company has not made a formal offer for Intel, according to third person familiar with the matter. The sources requested anonymity as the discussions are confidential. Intel declined to comment. Qualcomm did not immediately respond to a Reuters request for comment. Intel's shares closed up 3.3%, while Qualcomm fell 2.9%. The approach by Qualcomm comes at a moment of weakness for Intel, which was once the most valuable chipmaker in the world, but whose shares have lost nearly 60% of their value since the start of the year. A deal, should it go ahead, would likely invite scrutiny from antitrust regulators in the United States, China and Europe. Qualcomm may be required to divest parts of Intel in order to gain regulatory approvals. A bid would mark the biggest takeover attempt in the technology industry since Broadcom sought to buy Qualcomm for $142 billion in 2018, before President Donald Trump nixed the tie-up, citing national security risks. Reuters could not determine how Qualcomm, which has a market value of $188 billion, would finance a bid for Intel, which is valued at $122 billion, including its debt. Qualcomm has roughly $13 billion in cash, according to recent company filings. It is also unclear how Qualcomm would handle the takeover of Intel's contract manufacturing business. To build chips with an atomic level of precision, Intel has invested hundreds of billions of dollars over decades on its fabrication process and amassed tens of thousands of engineers to do it. Qualcomm has never operated a chip factory, or fab, and currently contracts the likes of Taiwan Semiconductor Manufacturing Co and uses designs and other technology supplied by Arm Holdings. INTEL'S WOES Once the dominant force in chipmaking, Intel ceded its manufacturing edge to Taiwanese rival TSMC and failed to produce a widely desired chip for the generative AI boom capitalized on by Nvidia and AMD. Intel has been attempting to turn its business around by focusing on AI processors and creating a chip contract manufacturing business, known as a foundry. As part of a memo from CEO Pat Gelsinger, Intel released a series of announcements that stemmed from a board meeting last week. Gelsinger and other executives presented a plan to shave off businesses and restructure the company, Reuters has previously reported. The company plans to pause construction on factories in Poland and Germany, and reduce its real estate holdings. Intel also said it had reached a deal to make a custom networking chip for Amazon.com's AWS. The Wall Street Journal reported on Qualcomm's talks with Intel earlier on Friday.

Qualcomm's potential bid for Intel turns the spotlight on their products

(Reuters) - Qualcomm has approached the once-dominant chipmaker Intel for a potential buyout, turning the spotlight on the portfolio of products these chip companies have to offer. A deal would unite Qualcomm's mobile-focused Snapdragon line with Intel's dominant PC and server chip divisions, creating a semiconductor powerhouse. Here are some of the areas where Qualcomm and Intel's product lines would come together: PROCESSORS Intel dominates the PC processor market with its Core series, which is widely used in desktops and laptops, while its Xeon series chips, designed to handle demanding workloads, are extensively used in servers and workstations. Qualcomm is a leader in mobile chips, producing Snapdragon processors that are widely used in smartphones and tablets. Intel also produces Atom processors for low-power devices, while Qualcomm has been expanding into laptop processors with its own compute platforms. MANUFACTURING Intel fabricates its chips in-house at company-owned facilities called "fabs," located in various parts of the world. Qualcomm does not make its own processors but has partnered with contract manufacturers like Taiwan Semiconductor Manufacturing Co and Samsung Foundry for chip production. CHIP ARCHITECTURE Intel primarily uses the x86 computing architecture, which is standard in desktops, laptops, and servers. Qualcomm relies on Arm Holdings' processor architecture, which powers smartphones and targets low power consumption. Computer code built for x86 chips will not automatically run on Arm-based designs. Intel has previously explored developing Arm-based chips, and software solutions are available to facilitate some compatibility between x86 and Arm architectures. AUTOMOTIVE BUSINESS Qualcomm also has a growing automotive business, focusing on technologies like connected cars, infotainment systems, and advanced driver-assistance systems. Intel's chips are used in vehicles, powering infotainment systems, digital instrument clusters, and more. The company's advanced chips for cars support AI features like generative AI and camera systems that monitor drivers and passengers. Intel also owns a majority stake in Mobileye Global and recently confirmed that it would not divest its majority stake in the self-driving tech firm. (Reporting by Harshita Mary Varghese and Jaspreet Singh in Bengaluru; Editing by Tasim Zahid)

Why and how Qualcomm's plan to buy Intel may backfire - Times of India

Qualcomm's potential deal to buy Intel may become a problem for the chipmaker, a report has said. While the deal may help the company diversify its business by the ownership of a struggling semiconductor manufacturing unit, it may find it difficult to turn around or sell, news agency Reuters reported. Citing analysts, the report further says that the deal of two major chip companies is likely to face intense antitrust scrutiny worldwide, as it would create a giant with significant market share in smartphones, PCs, and servers. "The rumoured deal between Qualcomm and Intel is intriguing on many levels and, from a pure product perspective, makes a certain degree of sense as they have a number of complementary product lines," Bob O'Donnell, TECHnalysis Research founder, was quoted as saying. "The reality of it actually occurring, however, is very low," he noted, adding that "it is unlikely Qualcomm would want all of Intel and trying to break apart the product business from the foundry business right now just would not be possible." Qualcomm eyeing expansion of business beyond smartphones The report says that Qualcomm is bolstering its efforts to expand beyond its smartphone business. The company has already launched chips for Microsoft Copilot+ laptops as well as for automotive applications. Reuters previously reported that Qualcomm CEO Cristiano Amon is personally involved in the Intel negotiations. Qualcomm lacks experience in foundry business While Intel designs and manufactures its own chips that power personal computers and data centres, Qualcomm relies on TSMC for chip-making and is dependent on Arm Holdings for other technology. Analysts have also expressed doubts about Qualcomm's ability to successfully manage Intel's foundry business while questioning the rationale behind such an acquisition. Meanwhile, Intel's foundry business is seen as crucial to the US' aim to grow domestic chip manufacturing. The company has secured about $19.5 billion in federal grants and loans under the CHIPS Act to build and expand factories across four US states. The TOI Tech Desk is a dedicated team of journalists committed to delivering the latest and most relevant news from the world of technology to readers of The Times of India. TOI Tech Desk's news coverage spans a wide spectrum across gadget launches, gadget reviews, trends, in-depth analysis, exclusive reports and breaking stories that impact technology and the digital universe. Be it how-tos or the latest happenings in AI, cybersecurity, personal gadgets, platforms like WhatsApp, Instagram, Facebook and more; TOI Tech Desk brings the news with accuracy and authenticity.

Intel, Qualcomm Deal Is 'Logically Unlikely': Analyst - Apollo Global Management (NYSE:APO), Intel (NASDAQ:INTC)

Qualcomm abandoned an attempt to buy NXP Semiconductors in 2018. It cost the company $2 billion. Don't expect Qualcomm Inc. QCOM to buy Intel Corporation INTC, Benchmark analyst Cody Acree says. Apollo Global Management APO intends to make a $5-billion investment in Intel. This development occurred after the Wall Street Journal reported that Qualcomm was interested in acquiring Intel outright -- a deal Acree says "was particularly thin on specific details." Benchmark analysts "believe Qualcomm's ultimate acquisition of Intel is logically unlikely," Acree says. In addition to Qualcomm facing a "steep financial hurdle," such an acquisition would also invite a "high degree of regulatory scrutiny," Acree wrote in an analyst note Monday. Benchmark understands Qualcomm's "attraction to the possibility of a combination of at least a portion of Intel," Acree says. Intel's chip design business, with its focus on the PC/notebook and server markets, is attractive, he adds. Qualcomm would need to offer an attractive 40% to 50% premium to its current trading price of around $22 for shareholders to take the deal seriously, but the regulatory spotlight put on the transaction may be too intense to overcome, according to Acree. Breakup fees would likely be $2 billion if the deal fell through. Qualcomm abandoned an attempt to buy NXP Semiconductors in 2018. It cost the company $2 billion after China's state regulator rejected the proposal. Nvidia Corporation's NVDA failed effort to take over Arm Holdings came with a $1.25 billion breakup fee after regulators in U.S., Europe and China blocked that deal. Acree also said that Intel has had major design challenges over the past few years that have cost it market share to AMD in both personal computers and servers, and it lacks a competitive edge in artificial intelligence strategy. "Ultimately, we're not convinced that Qualcomm will make a firm bid for Intel," he says. Acree reiterated a Hold rating on Intel, a Buy rating on Qualcomm and reiterated a $240 price target for Qualcomm. Price Action: Intel rose 1.65% to $22.20 in Monday's early-morning trading, while Qualcomm slipped 0.17% to $168.63. Now Read: Taiwan Semiconductor Denies UAE Investment Rumors Image: Shutterstock Market News and Data brought to you by Benzinga APIs

How Intel fell from global chip champion to takeover target

Three years ago, Intel was worth more than double its current value, and Chief Executive Pat Gelsinger was on the prowl for acquisitions. Now Intel itself is a takeover target, in a sign of how strategic missteps and the artificial-intelligence boom have combined to reshape the fortunes of America's most storied semiconductor company. A recent acquisition approach by Qualcomm, reported by The Wall Street Journal on Friday, reflects a vulnerability with few precedents in Intel's 56-year history. The problems started with manufacturing setbacks before Gelsinger took the helm. And they have worsened as the CEO pursued a costly turnaround strategy that failed to foresee how the explosion of interest in AI would fundamentally redirect demand toward a type of chips made by rival Nvidia. "Over the past two to three years the shift to AI was really the nail in the coffin for them," said Angelo Zino, a veteran industry analyst at CFRA Research. "They just didn't have the right capabilities." Even if Intel proves receptive, a deal with Qualcomm is far from certain for regulatory and other reasons. But the idea of the smartphone-chip giant acquiring Intel would have been almost unthinkable not that long ago. Intel reigned for decades as the world's most valuable semiconductor company, its chips nearly ubiquitous in personal computers and servers. In an industry where specialization was increasingly the norm, it was a rare company that designed and manufactured its own chips -- and it was the world leader in both. By the time Gelsinger became CEO in early 2021, Intel had lost some of its mojo, having fallen behind rivals in Asia in the race to manufacture the fastest-performing chips with the smallest transistors. Gelsinger, who had previously worked at Intel for decades and was its first chief technology officer, had a plan to bring back the swagger Intel enjoyed under chiefs such as Andy Grove and Paul Otellini. Doing so would entail catching up to those Asian rivals, Taiwan Semiconductor Manufacturing Co.and Samsung Electronics. He also planned to spend heavily to build out Intel's manufacturing operations, and to sell that production capacity to design-only chip companies such as Qualcomm -- breaking into the so-called foundry business that TSMC and Samsung dominate. It was a costly, ambitious bet, but the ingredients seemed to be there for it to work: a strong core business of making chips for personal computers and servers along with a constellation of side businesses that could help fund Intel's next stage of growth. Gelsinger quickly sought to use Intel's financial resources to build up the contract chip-making business, engaging in talks to buy GlobalFoundries for about $30 billion the summer after he took over. That deal fizzled, but in an August 2021 interview, the CEO said Intel remained acquisitive. "There will be consolidation in the industry," he told the Journal. "That trend will continue, and I expect that we're going to be a consolidator." He eventually settled on an acquisition of Tower Semiconductor, another contract chip maker, for more than $5 billion, although that deal was called off last year after Chinese regulators failed to approve it. Intel's contract-manufacturing business had a slow start toward Gelsinger's goal of becoming the world's second-largest such company by 2030. It cycled through several leaders and numerous potential customers who curbed or pulled their business after encountering technical missteps. As the costs mounted at Intel, generative AI started taking off. The boom shifted demand away from Intel's central processors toward "graphics processing units" from Nvidia, whose different design is better suited to the creation and deployment of the most sophisticated AI systems. As tech companies begged for Nvidia's scarce AI chips, many of Intel's processors sat on the shelves. Gelsinger was compelled to slash costs to preserve his turnaround effort. Intel laid off thousands of people starting in 2022 and cut its dividend last year. It wasn't enough. Last month, Gelsinger said it would lay off 15,000 people, cut costs by $10 billion next year and scrap the dividend. "The AI surge was much more acute than I expected," Gelsinger said at the time, calling the cuts "the hardest thing I've done in my career." Intel this past week announced new moves, including more spending controls and further separation of its design and manufacturing operations -- though Gelsinger stopped short of selling or spinning off the manufacturing business as some investors have urged. "We need to fight for every inch and execute better than ever before," Gelsinger told employees. "Because that's the only way to quiet our critics and deliver the results we know we're capable of achieving." Prospects for a positive turn in Intel's fortunes are narrowing but still possible, analysts say. Cutting costs can help it muddle through its struggles, although its declining stock price has made it more vulnerable to takeover bids and investor activism. Through Thursday's close, Intel's stock was down nearly 70% from its level in early 2020, when it reached its highest point since the dot-com bust. Nvidia's shares are up more than 18-fold in that period. Intel's stock ended up 3.3% in Friday trading after the Journal's report on Qualcomm's interest. Stacy Rasgon, an analyst at Bernstein Research, said Intel's future rests on the success or failure of a next-generation chip-making technology that is expected to go into production next year and that Intel hopes will vault it over its rivals, at least technologically. Returning to technological leadership could help improve profit margins and engender confidence among customers. Still, Intel has a fundamental problem that isn't going away: Its core chip business isn't expected to recover quickly amid continued strong spending on AI chips. "We can argue whether the strategy is right or wrong, but the problem is that the core business doesn't support the path," Rasgon said. At this point, though, "it may be too late for them to stop." For Qualcomm, buying Intel could help it vault into new segments of the chip industry. Qualcomm specializes in mobile-phone chips -- it is a supplier for Apple's iPhones, among other devices -- and has been building a portfolio of automotive and internet-of-things chips in recent years. Intel would add a large franchise of chips for personal computers and servers. It isn't clear, however, if Qualcomm would keep Intel's manufacturing operations in any deal. Those operations make Intel's business very different from that of Qualcomm, which outsources its production. Manufacturing is enormously complicated and expensive. Intel poured $25.8 billion into capital expenditures last year, equal to about 48% of its revenue. Qualcomm's capital spending in its last fiscal year totaled $1.5 billion, just over 4% of its sales.

Qualcomm buying Intel makes no sense because of AMD's ace in the hole

The hits just keep on coming for Intel. AMD's Epyc chips are gobbling up market share in data centers while Intel's desktop chips are frying themselves after years of being stuck on a stalled architecture. The company is laying off 15,000 people and spinning off its foundry business. And now that Intel is on the ropes, the Wall Street Journal reports that Qualcomm approached the company about a takeover, licking its lips over the possibility of swallowing Chipzilla whole. I'll eat my hat if it happens. Not just because Qualcomm buying Intel doesn't make sense given the companies' stock prices, cash reserves, and competitive positioning, as analyst Ming-Chi Kuo spells out. Not just because governments would likely shut the prospect down, with processors and foundries becoming a key battleground in international politics. Not just because Intel's current valuation is less than the sum of its parts. The reason why I think these rumors won't bear fruit is much simpler: The industry almost let AMD die a decade ago because a change of ownership would terminate the extensive x86 cross-licensing pact that exists between Intel and AMD. If Qualcomm (or anyone else for that matter) bought Intel, they'd need to renegotiate that deal -- and AMD isn't likely to offer charitable terms now that it's no longer on death's door. These days, AMD is riding high on the AI wave and buying up companies left and right. But the story was very different a decade ago. Back then, the company was struggling after its pricey acquisition of ATI's Radeon graphics and the utterly disastrous Bulldozer CPU launch. AMD was saddled with debt and wound up spinning off its fabrication arm as GlobalFoundries. For years afterward, AMD's very survival was a question mark, up until AMD's new Zen architecture -- dubbed "AMD's last chance" by The Motley Fool -- kicked off the company's comeback story. Yet even though AMD is Intel's only true rival in the x86 chip manufacturing space, no white knights or corporate raiders swooped in to bail AMD out for pennies on the dollar. Why not? Nobody has really said. But consider this: When AMD spun off GlobalFoundries, Intel threatened to sue AMD for breaching its x86 cross-licensing agreement. They wound up burying the hatchet with another patent agreement, but the threat of a potential thermonuclear patent war with Intel no doubt gave would-be AMD buyers pause. The Register reports that cross-licensing agreements remain in place between the two companies: "While a number of the aforementioned patents expired in 2021, it's our understanding that agreement is still in force and Qualcomm would be subject to change of control rules. In other words, Qualcomm wouldn't be able to produce Intel-designed x86-64 chips unless AMD gave the green light. It's also likely one of the reasons why no one bought AMD when it was on the ropes; whoever took over it would have to deal with Intel." Nobody wants to step on that landmine, even with Intel being a relative bargain right now. When you add in all those potential regulatory hurdles and the fact that buying Intel would put immense financial pressure on Qualcomm, the whole thing doesn't make sense. Ultimately, Qualcomm buying Intel smells like a story intended to move financial markets more than an actual possibility.

Qualcomm reportedly wants to buy chip giant Intel

Why it's matters: This could reshape the U.S. tech industry, and become the next president's first major antitrust case. By the numbers: Intel's stock price has fallen by 36% over the past year, even including a small boost on Friday from the Qualcomm news. The big picture: Intel's troubles began before the rise of generative AI, but it didn't recognize how the market was about to change -- namely in favor of the types of chips made by rival Nvidia, which now is worth $2.85 trillion. Zoom out: San Diego-based Qualcomm hasn't yet made an official offer for Santa Clara, Calif.-based Intel, nor explained publicly how it would finance such a giant acquisition.