Qualcomm has approached Intel with a takeover offer

What just happened? It’s no secret that Intel is struggling. The tech giant’s stock price has plummeted in recent years, making it a viable takeover target. Qualcomm’s bid is now on the table, and if it materializes, it could significantly change the trajectory of the semiconductor industry. But first, the companies will have to navigate a minefield of financial, regulatory, and strategic considerations.

In a development that could change the face of the semiconductor industry, Qualcomm has made a takeover offer for rival Intel, sources familiar with the matter told The Wall Street Journal. A successful takeover of Intel, given its $90 billion market value, would be the largest M&A deal in the technology industry, surpassing Microsoft’s $69 billion acquisition of Activision Blizzard.

The proposed combination would combine Qualcomm’s expertise in mobile chip technology with Intel’s strong position in PC and server processors. The acquisition of Intel would represent a significant strategic shift for Qualcomm, diversifying its portfolio and strengthening its position in the changing technology landscape.

The WSJ reports follow a Reuters article that said Qualcomm executives were investigating various Intel design units to determine whether any of them would fit into their product portfolio.

Qualcomm is worth nearly twice Intel’s, with a market capitalization of $184 billion, making it financially feasible for the mobile chip giant to acquire or acquire its various businesses.

Intel, once the undisputed chipmaker, has faced significant challenges in recent years, with its market value falling from a peak of $290 billion in 2020, making it a viable takeover target.

The company’s latest quarterly earnings report painted a grim picture, with revenue falling well short of expectations and a bleak outlook for the coming months. Under CEO Pat Gelsinger, Intel is working to revive its business. As part of its efforts to turn things around, Intel has launched a sweeping cost-cutting plan to reduce its workforce by more than 15 percent by year-end, restructure its operations and cut operating expenses by more than $10 billion in the coming year. The plan includes a 20 percent reduction in capital spending, significant cuts in research and development, and discontinuing underperforming products.

Earlier this month, Intel CEO Pat Gelsinger told employees the company was spinning off its foundry into an independent subsidiary, confirming rumors that had been circulating since August.

“Together, these changes are key steps forward as we build a leaner, simpler and more efficient Intel,” Gelsinger said of the foundry spinoff. “And they build on the immediate progress we’ve made since announcing our plan on August 1 to create a more competitive cost structure.”

Qualcomm’s takeover of Intel is far from certain, and Intel has not commented on the proposal. It has reportedly considered selling some assets as part of an effort to streamline the company, but an Intel spokesperson also explained that it is “deeply committed” to its PC business.

In addition, such a deal would be subject to intense scrutiny from antitrust regulators. The combined entity would have significant power in many chip markets, raising concerns about competition and market dominance.

On the other hand, the move could be seen as an opportunity to bolster America’s chipmaking capabilities. The merger of the two giants could strengthen America’s competitive edge in the global chip market, especially in the face of growing competition from Asia.