2 weeks Ago By David Richards
Intel once the powerhouse of the IT and PC industry is in trouble with their shares climbing over the weekend after it was revealed that mobile processor powerhouse Qualcomm has approached the US processor Company with a takeover offer. Plagued by internal problems and a lack of processors in key areas of todays processor eco system Intel is facing problems on multiple fronts including in the PC market with Qualcomm rolling out their version of an AI process to compete with Intel. They are also struggling in the AI server market.
Intel shares climbed after the Wall Street Journal reported the rumour which if it goes ahead could be a record setting takeover deal. Despite discussions occurring last week a deal is far from certain especially as it could create a major processor monopoly. Intel shares which are down 56% this year rose 3.
4% to $21.87 in New York trading on Saturday Sydney time. During the past few years Intel sales have slumped sales while losses have mounted exacerbated by the loss of its technological edge as competitors such as Qualcomm and Nvidia strip share.
The company’s market valuation, at A$134.5 billion, is now roughly half of Qualcomm’s and if a deal is reached it will be one of the biggest in history. Shares of San Diego-based Qualcomm declined 2.
9%, reflecting investors’ concerns about the risks of such a deal. Recently Intel announced a multibillion-dollar deal with Amazon.com to make a custom AI semiconductor and a plan to turn Intel’s ailing manufacturing business into a wholly owned subsidiary.
Qualcomm who doesn’t do its own chip production instead they use third parties such as Taiwan Semiconductor Manufacturing which also makes chips for Nvidia and Advanced Micro Devices. Bloomberg claims that acquiring Intel could potentially provide Qualcomm with access to its own production in the US, as well as giving it the biggest brand in the market for PCs and traditional server computers. The downside is that Qualcomm has no experience in handling manufacturing or doing the science behind cutting-edge production technology — an area where TSMC excels.
The New York Times claimed that Qualcomm that 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.
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