Qualcomm Inc.’s potential acquisition of Intel Corp. appears to have lost momentum, according to sources familiar with the situation, effectively putting an end to what could have been one of the largest tech deals in history. The deal has become less attractive to Qualcomm due to the complexities involved in acquiring Intel in its entirety, with sources suggesting that Qualcomm may instead consider acquiring individual parts of Intel or revisit the deal at a later date.
A takeover of Intel would have been among the largest acquisitions ever, based on Intel’s current market value. It would have surpassed Broadcom Inc.’s $61 billion acquisition of VMWare Inc. in 2023, making it the largest purchase of a technology hardware company. A successful deal could have reshaped the semiconductor sector, creating a dominant U.S. chip company amid global efforts to boost domestic chip production.
Both Qualcomm and Intel declined to comment on the matter.
The initial interest from Qualcomm surfaced in September, when it made a preliminary approach to Intel about a potential acquisition. This came shortly after Intel reported a disappointing earnings report, cutting its 2023 revenue forecast and announcing plans to reduce its workforce by 15% as part of a restructuring effort.
However, the potential deal faced multiple challenges, including financial, regulatory, and operational hurdles. These included Intel’s substantial debt, which exceeds $50 billion, and the likelihood of a prolonged antitrust review, especially in key markets like China. Additionally, Qualcomm would have been tasked with managing Intel’s money-losing semiconductor manufacturing unit, an area where Qualcomm has little expertise.
Looking to the future, Qualcomm is exploring new markets such as personal computers, networking, and automotive chips. The company is aiming to generate an additional $22 billion in annual revenue by fiscal 2029. Qualcomm CEO Cristiano Amon recently stated in a Bloomberg Television interview that, “right now, at this time, we have not identified any large acquisition that is necessary for us to execute on this $22 billion” strategy.
Intel, once one of the world’s largest chipmakers, is in the midst of attempting a major transformation. While competitors like Nvidia have surged ahead in the AI chip race, Intel is striving to reinvent itself and regain ground. The company currently has a market value of around $107 billion, though its stock has dropped about 51% this year.
Intel’s CEO, Pat Gelsinger, reaffirmed his commitment to keeping the company intact in an interview earlier this month, noting that he has the board’s full support for his plan. “There’s a lot of attention on Intel, which just reinforces what a central role it plays in the technology industry,” Gelsinger remarked. “We believe distinct, but better together, is the strategy.”
Additionally, Intel is in negotiations with potential investors for its Altera programmable chip unit, with Lattice Semiconductor Corp. showing interest in acquiring Altera in its entirety, while private equity firms are exploring minority stake acquisitions. Intel expects to finalize the deal early next year.
According to analysts at Bloomberg Intelligence, despite the reduced CHIPS Act grant of $8 billion, down from $8.5 billion, the impact on Intel’s capital spending trajectory and manufacturing efforts should be minimal. Challenges remain, but Intel’s liquidity cushion, bolstered by its Pentagon contract and other factors, provides some stability.
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