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Qualcomm has reached out to the struggling chipmaker Intel regarding a potential takeover. However, it remains uncertain whether Intel has entered into discussions with Qualcomm or what the specific terms of any potential deal would be, according to a source familiar with the situation who requested anonymity due to the confidential nature of the information.
The Wall Street Journal was the first to report on the development. Following the news, Intel’s shares initially surged before closing up approximately 3%, while Qualcomm’s shares dropped about 3% by the end of the trading day. If the deal goes through, it would be one of the largest technology mergers in history, with Intel boasting a market capitalization of over $90 billion.
Once the leading chipmaker in the world, Intel has faced a prolonged decline, which intensified in 2024. The company’s stock saw its largest single-day drop in over 50 years in August after it reported lackluster earnings. Consequently, Intel shares have plummeted 53% this year, as investors question the viability of its costly chip manufacturing and design initiatives. While both Qualcomm and Intel compete in markets for PC and laptop chips, Qualcomm does not produce its own chips; instead, it partners with firms like Taiwan Semiconductor Manufacturing Company and Samsung for manufacturing.
On Monday, following a board meeting focused on strategy, Intel CEO Patrick Gelsinger issued a memo to employees reaffirming the company’s dedication to heavily investing in its foundry business, a venture that could cost around $100 billion over the next five years. The memo also mentioned that Intel is considering external investment options. Additionally, the company has missed out on the artificial intelligence surge that has captivated Wall Street, as most advanced AI programs, including ChatGPT, operate on Nvidia graphics processors rather than Intel’s central processors. Analysts report that Nvidia holds over 80% of this rapidly expanding market.
Qualcomm’s revenue falls short of Intel’s, with the company reporting $35.8 billion in sales for fiscal 2023, compared to Intel’s $54.2 billion during the same period. Any prospective deal between the two would likely face challenges related to antitrust and national security concerns. Both firms have business operations in China and have encountered setbacks with Chinese antitrust authorities that have derailed previous agreements. Intel’s effort to acquire Tower Semiconductor and Qualcomm’s attempt to purchase NXP Semiconductor both ended in failure.
Several other significant acquisitions in the sector have also been derailed. In 2017, Broadcom sought to acquire Qualcomm for more than $100 billion, but the Trump administration intervened the following year, blocking the deal over national security concerns due to Broadcom’s Singaporean headquarters. Furthermore, in 2021, the Federal Trade Commission took legal action to halt Nvidia’s proposed acquisition of Arm, citing antitrust issues. The deal was ultimately scrapped in 2022 amid growing scrutiny from regulators in Europe and Asia.
