Intel has received a takeover offer from Qualcomm.
If US semiconductor giant Qualcomm decides to acquire Intel, it will likely be the biggest acquisition in Silicon Valley history.
In mid-September, multiple reports emerged that California semiconductor company Qualcomm had approached Intel for acquisition, raising the possibility that Intel could hand over its 56-year history to a younger rival.
Qualcomm is not a newcomer to Silicon Valley. Qualcomm was founded in 1985, 39 years ago. Since then, it has grown to become a company valued at more than $188 billion, specializing in areas such as wireless networks, smartphone processors, and modems.
However, recent problems at Intel, which has been designing and manufacturing chips for many years, have caused the company to lose more than half of its value in 2024, with its market capitalization dropping to just over $93 billion (approximately 13.3 trillion yen). . And these problems with Intel seem to be the reason Qualcomm is considering acquiring the company.
While top competitors like Nvidia have soared higher in the generative AI boom, Intel has struggled to gain investor interest with the technology. The company is also grappling with production and strategic challenges.
In August 2024, Intel announced layoffs of 15,000 employees and suspension of dividends starting from the fourth quarter of 2024, and its market capitalization decreased to approximately $30 billion (approximately 4.2 trillion yen) in the month of August. ) was hit by a severe collapse.
Qualcomm’s acquisition of the struggling Intel is still in its very early stages and is still being explored. A person close to Qualcomm told the Financial Times that the company would “proceed only with friendly transactions.”
Intel presents pros and cons to Qualcomm
Intel CEO Pat Gelsinger has implemented radical new measures to strengthen the company.
For some, the reasons for moving forward with this deal are obvious.
Industry analyst Patrick Moorhead said on CNBC in mid-September that Intel is expanding into key areas such as the data center and PC markets, and that Qualcomm has chip manufacturing capabilities that Qualcomm lacks (Taiwan’s He said there are “synergy effects” because the process is outsourced to TSMC.
Intel is also taking steps to make this a more attractive acquisition. Intel CEO Pat Gelsinger on September 16 announced a series of radical measures to transform the company and position it for a brighter future.
Gelsinger said these measures include closing a “multi-year, multi-billion dollar” custom chip design contract with tech giant Amazon Web Services and suspending plans to build a factory in Europe. , and the independence of its manufacturing division, Intel Foundry.
Still, not everyone is convinced that Qualcomm needs Intel or that an acquisition would be a good choice for both companies.
Richard Windsor, an equity research analyst and founder of Radio Free Mobile, a research firm specializing in digital and mobile, believes that one company designed a chip and another “It’s possible that Qualcomm and Intel would work well together,” with one company owning a manufacturing plant, but many of Intel’s businesses wouldn’t be such a good fit, he said.
“While vultures roam around Intel, and while Intel is delicious and nutritious food for some, I believe that Intel stands out among Qualcomm’s prey, and Qualcomm provides indigestion.” “I think it will happen,” he wrote in a Sept. 23 report.
Windsor points out several important reasons.
Intel’s x86 processors lag behind products from Qualcomm and rival Arm. Given Qualcomm’s “already strong relationships” with manufacturers like TSMC, redesigning Intel chips “seems like a risky proposition.”he said.
Ming-Chi Kuo, a Taiwanese market analyst at financial services firm TF International Securities, went a step further, writing over the weekend that an Intel acquisition could be “disastrous” for Qualcomm. It states that there is no.
“According to my industry research, Qualcomm is currently in acquisition talks with Intel. However, if this acquisition goes through, it could be disastrous for Qualcomm.” (From Guo Mingjun’s X post) )
The basis for this wasQualcomm’s “primary focus is to establish a competitive edge with AI chips for segments such as smartphones,” and the Intel acquisition is unlikely to help it do that.That’s what it was.
Intel’s acquisition could improve its position in the artificially intelligent PC market, but Guo Mingjun will not be able to buy Qualcomm’s processors on Microsoft’s Windows on Arm platform (a version of Windows that runs on Microsoft’s much-hyped Arm technology). Judging from the fact that it is used,Qualcomm already has a strong position in this fieldsays.
“I think Qualcomm’s PC market share will rapidly expand with the Intel acquisition, but it will come at a big price. Qualcomm can grow in the AI PC market even without the acquisition.” (Guo Mingjun)
It’s also unclear how Qualcomm will raise the cash to acquire Intel..The company has $13 billion (approximately 1.86 trillion yen) in cash, but even when free cash flow is taken into account, it’s nowhere near Intel’s price.
This competition will also make regulators more wary. Qualcomm’s acquisition of Intel could face regulatory hurdles similar to Nvidia’s bid for Arm in 2020, which it abandoned in 2022.
Intel will naturally want to consider its options. Bloomberg reported on September 22 that a new option is emerging after investment giant Apollo has offered Intel a “multibillion-dollar investment.”
In that case, Intel would be able to provide critical capital for the new project and stand on its own two feet.
[Original text]
(Translated and edited by Sayuri Daimon)
Source: BusinessInsider
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