A man wearing glasses and a blue suit stands in front of a red wall displaying open laptops.

Cristiano Amon’s Qualcomm has asked executives at chip rival Intel if they would be interested in selling.

Credit…Ann Wang/Reuters
By Lauren Hirsch and Don Clark

Sept. 20, 2024

The chipmaker Qualcomm has approached its rival Intel in recent days about the possibility of acquiring the slumping Silicon Valley giant, two people familiar with the matter said Friday, requesting anonymity because the talks were confidential.

Qualcomm has not yet made an official offer for Intel, one of the people said, and the obstacles to a deal remain steep. Any deal would likely draw significant regulatory scrutiny, given the mammoth size and national security importance of both chip companies. It is unclear whether regulators would allow Qualcomm to buy Intel without taking on its struggling foundry business, and it remains equally unclear whether Qualcomm would want to take on that complex endeavor.

A deal would also be costly. Intel, which has seen its shares fall nearly 40 percent over the last year, has a market capitalization of $93 billion. Qualcomm, which has seen its shares rise 55 percent, has a market value of $169 billion.

Qualcomm and Intel, through spokeswomen, both declined to comment. The Wall Street Journal earlier reported Qualcomm’s approach.

That any chip-making rival would consider trying to buy Intel would have been inconceivable a decade ago. But years of management issues and whiffs on technology transitions have weakened what was once one of Silicon Valley’s most powerful companies.

Intel missed out on selling chips for mobile phones and has failed to capitalize on the boom in artificial intelligence, a field rival Nvidia now dominates with specialized chips used in data centers. Intel’s chip manufacturing operations, once the most advanced, also lost a technology lead to Taiwan Semiconductor Manufacturing Company.

Intel’s problems were underscored in early August, when it announced a $1.6 billion quarterly loss and plans to cut 15,000 jobs. The company, the largest planned recipient of federal financing under legislation called the CHIPS Act, on Monday announced other moves that include plans to pause the setting up of new plants in Germany and Poland.

Qualcomm, based in San Diego, is a leader in cellular technology and provides chips used in flagship smartphones from companies such as Apple and Samsung Electronics.

Unlike Intel, Qualcomm has never operated factories, a costly business that most chip designers avoid. So it would seem more likely to be interested in the Intel operations that design chips, as well as its broad expertise in PC software and channels for selling those systems, said Patrick Little, a former Qualcomm executive who now is chief executive of SiFive, a Silicon Valley start-up that sells rival microprocessor designs.

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“Those are things Qualcomm would have to mature on their own over time,” Mr. Little said. “If they worked with or somehow had a piece of Intel that could accelerate that part of their strategy.”

Any effort to buy Intel would likely face a tough antitrust review and would be scrutinized closely on national security grounds, since its design and manufacturing operations are important for defense applications and overall U.S. competitiveness in semiconductors.

Lauren Hirsch reported from New York and Don Clark from San Francisco.

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