Qualcomm has approached Intel about a takeover in recent days, source says

Qualcomm has in recent days approached Intel to explore the possibility of acquiring the struggling chipmaker, a source familiar with the situation said Friday. The deal could prove to be groundbreaking for the sector but faces a number of hurdles.

Qualcomm CEO Cristiano Amon is personally involved in negotiations to acquire 50-year-old Intel, according to a source briefed on the matter. Another person familiar with the situation said Amon is actively exploring different deal options for the company.

Earlier this month, Reuters reported that Qualcomm was exploring the possibility of acquiring part of Intel’s design business, and that its PC design unit was of particular interest. Qualcomm executives were exploring Intel’s entire portfolio of businesses.

Talks with Intel are in the early stages. The San Diego-based company has not made a formal offer to Intel, according to a third person familiar with the matter.

The sources requested anonymity because the discussions are confidential.
Intel declined to comment. Qualcomm did not immediately respond to Reuters’ request for comment.

Intel shares ended the day up 3.3%, while Qualcomm fell 2.9%.

Qualcomm’s move comes at a time of weakness for Intel, which was once the world’s most valuable chipmaker but whose shares have lost nearly 60 percent of their value since the beginning of the year.

The deal, if completed, is likely to face scrutiny from antitrust regulators in the United States, China and Europe. Qualcomm could be required to divest parts of Intel to secure regulatory approvals.

The bid would be the biggest takeover attempt in the tech industry since Broadcom sought to buy Qualcomm for $142 billion in 2018, but President Donald Trump rejected the proposal, citing national security risks.

Reuters could not determine how Qualcomm, which has a market value of $188 billion, would finance its takeover bid for Intel, which is valued at $122 billion including debt.

Qualcomm has about $13 billion in cash on hand, according to the latest company filings.

It’s also unclear how Qualcomm would go about taking over Intel’s contract manufacturing business. To build atomic-precision chips, Intel has invested hundreds of billions of dollars over decades in the manufacturing process and amassed tens of thousands of engineers to do it.

Qualcomm has never owned its own factory or chip manufacturing facility, and now partners with companies such as Taiwan Semiconductor Manufacturing Co. and uses designs and other technology from Arm Holdings.

Intel, once a dominant force in the chip market, has surrendered its manufacturing advantage to Taiwanese rival TSMC and failed to produce a widely coveted chip for the generative AI boom that has benefited Nvidia and AMD.

Intel is trying to turn its business around by focusing on AI processors and creating a contract chip 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 outlined a plan to cut operations and restructure the company, Reuters previously reported.

The company plans to halt construction of factories in Poland and Germany and reduce its real estate holdings. Intel also said it had reached an agreement to create a custom network chip for Amazon.com’s AWS.

On Friday, The Wall Street Journal reported on Qualcomm’s talks with Intel.