Qualcomm Inc has approached Intel Corp to discuss a potential acquisition of the struggling chipmaker, people with knowledge of the matter said, raising the prospect of one of the biggest-ever merger and acquisition deals.
California-based Qualcomm proposed a friendly takeover for Intel in recent days, said the sources, who asked not to be identified discussing confidential information.
The proposal is for all of the chipmaker, although Qualcomm has not ruled out buying some parts of Intel and selling off others.
Photo:REUTERS
It is uncertain whether the initial approach would lead to an agreement and any deal is likely to come under close antitrust scrutiny and take time to complete, the sources said.
Qualcomm has been speaking with US regulators and believes an all-US combination could allay any concerns, they said.
Qualcomm is looking at Intel at a time when its smaller rival is in the midst of the most difficult period in the company’s 56-year history.
Intel’s shares have fallen about 37 percent over the past 12 months, giving it a market value of about US$93 billion.
Qualcomm’s stock has risen more than 50 percent during the same period to a market capitalization of about US$188 billion. At such values, any deal between Qualcomm and all of Intel would rank among the largest on record.
The Wall Street Journal reported Qualcomm’s interest on Friday, driving Intel’s shares up by more than 3 percent. Representatives for Qualcomm and Intel declined to comment.
Intel chief executive officer Pat Gelsinger still believes his turnaround plan could be sufficient for the company to remain independent, but he is open to considering the merits of different potential transactions, the sources said.
Both companies would now assess various options with advisers, they said.
While Qualcomm’s approach raises the prospect of others entering the fray, at least one large rival is opting to sit on the sidelines for now.
Broadcom Inc is not currently evaluating an offer for Intel, the sources said.
The company had previously been assessing whether to pursue a deal, they added.
Advisers continue to pitch ideas to Broadcom, the sources said. A representative for Broadcom declined to comment.
Intel is headed toward its third consecutive year of shrinking sales, estimated to make US$52 billion in revenue this year, just 70 percent of its 2021 revenue.
The stock did receive a bounce last week after the company made a raft of announcements that spurred optimism in Gelsinger’s turnaround plan.
In the most notable move, Intel struck a multibillion-dollar deal with Amazon.com Inc’s Amazon Web Services cloud unit to coinvest in a custom artificial intelligence semiconductor and outlined a plan to turn its ailing manufacturing business, or foundry, into a wholly owned subsidiary.
The decision to separate Intel’s foundry operations from the rest of the tech company is aimed in part at convincing prospective customers — some of which compete with Intel — that they are dealing with an independent supplier.
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