Qualcomm has recently approached Intel with a request for a takeover offer.

Unlock Editor’s Digest for Free

Chipmaker Qualcomm recently approached its struggling rival Intel about a potential takeover, according to two people familiar with the matter.

A deal is not certain and no formal offer has been made, according to people familiar with the approach. A person close to Qualcomm said the chipmaker would only seek a friendly deal, while people familiar with Intel’s thinking said the company fears a deal would be blocked by antitrust regulators.

A full takeover of Intel would surpass Microsoft’s $69 billion takeover of Activision as the largest technology deal in history. Intel’s market capitalization was $93 billion on Friday after its stock rose 8 percent following a preliminary report on Qualcomm’s approach by The Wall Street Journal.

Once the world’s largest chipmaker, Intel, which has fallen from favor for years, has accelerated in recent months. The company lost nearly $30 billion in market value in August after a disastrous earnings report in which Chief Executive Pat Gelsinger announced 15,000 layoffs and scrapped a dividend.

Intel’s stock price has fallen 50 percent since the start of this year, putting the company on the defensive due to the risk from potential bidders and the threat from hostile shareholders.

Intel is working with Goldman Sachs and Morgan Stanley to evaluate Qualcomm’s approach, people familiar with the matter said. Morgan Stanley investment bankers have been advising the company on how to defend itself against activist investors for several months, CNBC previously reported.

Intel is considering selling a wide range of assets, according to people familiar with the company’s thinking.

Qualcomm has raised the issue of a full takeover of Intel after it explored the possibility of acquiring several Intel assets, people familiar with the matter said, confirming an earlier report by Reuters.

Unlike Intel, Qualcomm does not build its own chips, but instead outsources production. Qualcomm, which has a market capitalization of $188 billion, is working with investment bank Evercore to evaluate its approach to Intel.

It is unclear how a wholesale takeover of Intel would be financed or whether assets would be divested as part of the acquisition. The deal would likely face intense antitrust scrutiny and political concerns about national security.

If the deal goes through, it would be presented to U.S. regulators as an attempt to strengthen U.S. chipmakers’ position in competition with Chinese producers, people familiar with the matter said.

The people warned that a lengthy takeover process could cause chipmakers to fall behind foreign rivals, potentially derailing the deal.

Intel and Goldman Sachs declined to comment. Morgan Stanley, Evercore and Qualcomm did not immediately respond to requests for comment.

The approach increases pressure on Gelsinger, who was appointed in 2021 and has been executing a five-year restructuring plan for the past three years to transform Intel into a chipmaker that rivals industry leader Taiwan Semiconductor Manufacturing Company.

The company has hit a few bumps in the road: Prominent executives have departed, including industry veteran Lip-Bu Tan, who left the company’s board. Intel has also lagged behind rivals Nvidia and AMD in selling AI chips to data centers.

Intel shareholders would likely reject a sale to Qualcomm, Citi analysts argued in a note Friday. They said Intel should instead divest from its semiconductor business “because we believe the company has very little chance of becoming a profitable, leading foundry.”

The takeover talks are “almost too silly to comment on,” they wrote.