Intel Corp. shares have seen a rise amidst speculation of a possible takeover by Qualcomm Inc., according to a report by the Wall Street Journal. If it materializes, this could be a game-changing deal for the semiconductor industry.
Anonymous sources familiar with the situation have revealed that discussions have taken place recently. However, the outcome is still uncertain. Both Intel and Qualcomm have refrained from making any comments.
Impact on Share Prices
Friday saw Intel’s shares rise by 3.4% to $21.87 in New York trading, a recovery after a decline earlier in the day. Nevertheless, the stock remains down by 56% this year.
On the other hand, Qualcomm’s San Diego-based shares saw a decline of 2.9%, reflecting the investors’ apprehension about the risks of such a deal.
Intel’s Market Valuation
Formerly the world’s largest chipmaker, Intel has been grappling with dwindling sales and increasing losses, further aggravated by the loss of its technological advantage. With a market valuation standing at $93.5 billion, it’s now approximately half of Qualcomm’s. However, if the takeover does occur, it would be the biggest-ever transaction for the semiconductor market and could drastically reshape the industry.
Efforts to Revive Business
Located in Santa Clara, California, Intel recently announced a series of changes aimed at reviving its business. The strategies include a multi-billion dollar deal with Amazon.com Inc. to create a custom AI semiconductor and a plan to convert Intel’s struggling manufacturing business into a wholly owned subsidiary.
Qualcomm’s Expansion Endeavors
- As the world’s leading designer of smartphone processors, Qualcomm has been seeking to diversify. This involves venturing into the domain of personal computer chips where Intel still holds the majority share.
- Unlike most of its industry counterparts, Qualcomm doesn’t manufacture its own chips. Instead, it outsources production to partners like Taiwan Semiconductor Manufacturing Co., which also produces chips for Nvidia Corp. and Advanced Micro Devices Inc.
- Acquiring Intel could potentially afford Qualcomm access to its own production in the US. Moreover, it would also give it the most prominent brand in the market for PCs and traditional server computers.
The Challenges Ahead
However, a Qualcomm takeover wouldn’t necessarily solve Intel’s issues. Qualcomm has no experience in managing manufacturing or the science behind cutting-edge production technology — an area where Taiwan Semiconductor Manufacturing Co. excels.
More than six years ago, Qualcomm found itself in the middle of a contentious takeover saga when Broadcom Inc. attempted to acquire the company. The deal fell through after President Donald Trump blocked it, citing national security risks.
This potential deal between Intel and Qualcomm promises to be a pivotal point in the chip industry, and we will continue to monitor the developments closely.
