Qualcomm ‘Offers To Buy Intel’

Mobile chip giant Qualcomm approached Intel with a takeover offer in recent days, the Wall Street Journal reported, as Intel struggles with one of the worst crises in its history.

Intel’s shares have dropped by roughly 60 percent this year as the company has tried to implement a strategic shift centred on its foundry business, in which it faces tough competition from dominant contract chip manufacturer Taiwan Semiconductor Manufacturing Company (TSMC).

A deal between the two companies is far from certain, the report said.

Even if Intel were receptive, an acquisition of such a large size would be almost certain to attract regulatory scrutiny.

Takeover offer

However, such a deal could also be seen as strengthening the US’ domestic chipmaking capabilities at a time when the country has been trying to bring more chip manufacturing within its borders.

To carry the deal through Qualcomm would sell assets or parts of Intel, the report said, citing unnamed sources.

Intel’s shares rose 3.3 percent on Friday, valuing the company at about $93 billion (£70bn).

Qualcomm, which is the dominant seller of chips for mobile phones, saw it shares dip 2.9 percent on Friday, giving it a value of about $188bn, or more than double Intel’s market capitalisation.

Intel had a market value at its peak of more than $290bn, when it and Microsoft dominated personal computing, but has faltered in recent years as it failed to take advantage of new trends toward smartphones and most recently artificial intelligence (AI).

The company confirmed last week it plans to establish its foundry business as an independent subsidiary, making the unit more independent and allowing it to take outside capital, as one of several moves to cut costs while pushing forward with restructuring efforts.

Restructuring plan

The company began reporting Intel Foundry’s financial performance separately early this year.

Intel’s board has decided to sell a stake in programmable chip business Altera, the company said, as it looks at which businesses to shed and which to retain.

The company is to pause construction on new plants in Germany and Poland for two years, while pushing ahead with expansion in Arizona, New Mexico, Oregon and Ohio.

Intel said last week it and Amazon Web Services (AWS) would co-invest in a custom chip for AI computing, known as a fabric chip, in a significant win for Intel’s manufacturing division.