Will Qualcomm Takeover Intel? Whoa!

According to the Wall Street Journal, Qualcomm approached Intel for a potential takeover. Is this possible? DIGITIMES Asia claims such a takeover would provide strategic value for Qualcomm, but Goliath Intel may pose several challenges for Qualcomm to do the deal.

Obstacles include regulatory challenges such as antitrust evaluation in multiple jurisdictions. Qualcomm must ensure that any divestitures or restructuring do not violate competition laws, particularly given Intel’s market position. Given the two companies do not compete in the same market spaces, except for PC CPUs, other countries will need to review the deal, including China. China’s passive disapproval led to the failure of Intel’s acquisition of Tower Semiconductor.

Intel’s management and shareholders may also resist a takeover, and Intel’s existing customers, partners, and suppliers may balk if they are concerned about the implications of a takeover. Intel’s foundry business contracts with third-party clients, including the recently announced AWS deal, could be problematic. If Qualcomm decides to scale back or eliminate the segment, it could lead to legal disputes and/or loss of revenue from already established contracts.

Intel’s market value is around US$93 billion; a stock-for-stock transaction is most likely for the takeover. However, Qualcomm would have to convince investors and financial institutions of the potential profitability of the acquisition, considering Intel’s financial struggles with its foundry business.

Qualcomm would benefit from the takeover in many ways, including a vast portfolio of intellectual properties, a significant market share in the PC chip market, and an accelerated entry into edge AI computing, which is a promising area for future growth.

Qualcomm’s bid is challenging, and it could ultimately require careful negotiation, strategic planning, and a willingness to adapt to the responses of various stakeholders.