Qualcomm has approached Intel about taking the money in recent days, a source told Reuters
Written by Max A. Cherney
SAN FRANCISCO (Reuters) – Qualcomm in recent days has spoken to Intel (NASDAQ: and many. obstacles.
Qualcomm (NASDAQ: ) CEO Cristiano Amon is personally involved in talks to acquire 10-year-old Intel, according to a source briefed on the matter. Another person familiar with the situation said that Amon has been evaluating different things to get the company's contract.
Earlier this month, Reuters reported that Qualcomm had explored the possibility of acquiring parts of Intel's design business and that its PC design division was of particular interest. Qualcomm executives have been evaluating Intel's entire portfolio of businesses.
Negotiations 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 asked not to be named as the discussions are confidential.
Intel declined to comment. Qualcomm did not immediately respond to a Reuters request for comment.
Intel shares closed up 3.3%, while Qualcomm fell 2.9%.
Qualcomm's approach comes at a time of weakness for Intel, which was once the world's most important chip maker, but whose shares have lost nearly 60 percent of their value since the beginning of the year.
The deal, if it goes ahead, could invite scrutiny from antitrust regulators in the United States, China and Europe. Qualcomm may be required to divest Intel components to obtain regulatory approvals.
The bid would mark the biggest takeover attempt in the tech industry since Broadcom (NASDAQ: ) sought to buy Qualcomm for $142 billion in 2018, before President Donald Trump blocked the merger, citing national security risks.
Reuters could not specify how Qualcomm, which has a market value of $188 billion, would finance a bid by Intel, which is valued at $122 billion, including its debt.
Qualcomm has a net worth of about $13 billion, according to the company's most recent filing.
It is also unclear how Qualcomm will handle taking over Intel's contract manufacturing business. To build chips with atomic-level precision, Intel has invested hundreds of billions of dollars over decades in its manufacturing process and recruited tens of thousands of engineers to do it.
Qualcomm has never used a chip factory, or fabric, and currently contracts with Taiwan Semiconductor Manufacturing Co and uses designs and other technologies provided by The arm Holdings (NASDAQ:).
INTEL COSTS
Once the dominant force in chipmaking, Intel handed over its manufacturing edge to Taiwanese rival TSMC and failed to produce the much-desired chip for the generative AI boom made by Nvidia (NASDAQ: ) and AMD (NASDAQ: ).
Intel has been trying to transform its business by focusing on AI processors and creating a contract manufacturing business for chips, known as the Foundry.
As part of a memo from CEO Pat Gelsinger, Intel released a series of announcements stemming from last week's board meeting. Gelsinger and other executives have launched a plan to shave off businesses 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 has reached an agreement to make a custom network chip for Amazon.com (NASDAQ:)'s AWS.
The Wall Street Journal reported on Qualcomm's talks with Intel earlier on Friday.
