Qualcomm Approached Intel About a Takeover (msn.com) 26
Friday the Wall Street Journal reported Qualcomm recently "made a takeover approach" to Intel, which has a market value of roughly $90 billion ("according to people familiar with the matter...")
A deal is far from certain, the people cautioned. Even if Intel is receptive, a deal of that size is all but certain to attract antitrust scrutiny, though it is also possible it could be seen as an opportunity to strengthen the U.S.'s competitive edge in chips... Both Intel and Qualcomm have become U.S. national champions of sorts as chip-making gets increasingly politicized. Intel is in line to get up to $8.5 billion of potential grants for factories in the U.S. as Chief Executive Pat Gelsinger tries to build up a business making chips on contract for outsiders...
Both Intel and Qualcomm have been "overshadowed" by Nvidia's success in powering the AI boom, the article points out.
But "To get the deal done, Qualcomm could intend to sell assets or parts of Intel to other buyers... A deal would significantly broaden Qualcomm's horizons, complementing its mobile-phone chip business with chips from Intel that are ubiquitous in personal computers and servers..." Qualcomm's approach follows a more than three-year turnaround effort at Intel under Gelsinger that has yet to bear significant fruit. For years, Intel was the biggest semiconductor company in the world by market value, but it now lags behind rivals including Qualcomm, Broadcom, Texas Instruments and AMD. In August, following a dismal quarterly report, Intel said it planned to lay off thousands of employees and pause dividend payments as part of a broad cost-saving drive. Gelsinger last month laid out a roadmap to slash costs by more than $10 billion in 2025, as the company reported a loss of $1.6 billion for the second quarter, compared with a $1.5 billion profit a year earlier...
Intel earlier this year began to report separate financial results of its manufacturing operations, which many on Wall Street saw as a prelude to a possible split of the company. Some analysts have argued Intel should be split into two, mirroring a shift in the industry toward specializing in either chip design or chip manufacturing. Splitting up immediately might not be possible, however, Bernstein Research analyst Stacy Rasgon said in a recent note. Intel's manufacturing arm is money-losing and hasn't gained strong traction with customers other than Intel itself since Gelsinger opened the factories to outside chip designers three years ago. Gelsinger has been doubling down on the company's factory ambitions, outlining spending of hundreds of billions of dollars building new plants in the U.S., Europe and Israel in recent years.
Given Intel's market value, a successful takeover of the entire company would rank as the all-time largest technology M&A deal, topping Microsoft's $69 billion acquisition of Activision Blizzard.
Intel's stock "had its biggest one-day drop in over 50 years in August after the company reported disappointing earnings," reports CNBC. Partly because of that one-day, 26% drop, Intel's shares "are down 53% this year as investors express doubts about the company's costly plans to manufacture and design chips."
But the Register remains skeptical about Qualcomm taking over Intel: Chipzilla may not be worth much to Qualcomm unless it can renegotiate the x86/x86-64 cross-licensing patent agreement between Intel and AMD, which dates back to 2009. That agreement is terminated if a change in control happens at either Intel or AMD.
While a number of the patents expired in 2021, it's our understanding that agreement is still in force and Qualcomm would be subject to change of control rules. In other words, Qualcomm wouldn't be able to produce Intel-designed x86-64 chips unless AMD gave the green light. It's also likely one of the reasons why no one bought AMD when it was dire straits; whoever took over it would have to deal with Intel.
Both Intel and Qualcomm have been "overshadowed" by Nvidia's success in powering the AI boom, the article points out.
But "To get the deal done, Qualcomm could intend to sell assets or parts of Intel to other buyers... A deal would significantly broaden Qualcomm's horizons, complementing its mobile-phone chip business with chips from Intel that are ubiquitous in personal computers and servers..." Qualcomm's approach follows a more than three-year turnaround effort at Intel under Gelsinger that has yet to bear significant fruit. For years, Intel was the biggest semiconductor company in the world by market value, but it now lags behind rivals including Qualcomm, Broadcom, Texas Instruments and AMD. In August, following a dismal quarterly report, Intel said it planned to lay off thousands of employees and pause dividend payments as part of a broad cost-saving drive. Gelsinger last month laid out a roadmap to slash costs by more than $10 billion in 2025, as the company reported a loss of $1.6 billion for the second quarter, compared with a $1.5 billion profit a year earlier...
Intel earlier this year began to report separate financial results of its manufacturing operations, which many on Wall Street saw as a prelude to a possible split of the company. Some analysts have argued Intel should be split into two, mirroring a shift in the industry toward specializing in either chip design or chip manufacturing. Splitting up immediately might not be possible, however, Bernstein Research analyst Stacy Rasgon said in a recent note. Intel's manufacturing arm is money-losing and hasn't gained strong traction with customers other than Intel itself since Gelsinger opened the factories to outside chip designers three years ago. Gelsinger has been doubling down on the company's factory ambitions, outlining spending of hundreds of billions of dollars building new plants in the U.S., Europe and Israel in recent years.
Given Intel's market value, a successful takeover of the entire company would rank as the all-time largest technology M&A deal, topping Microsoft's $69 billion acquisition of Activision Blizzard.
Intel's stock "had its biggest one-day drop in over 50 years in August after the company reported disappointing earnings," reports CNBC. Partly because of that one-day, 26% drop, Intel's shares "are down 53% this year as investors express doubts about the company's costly plans to manufacture and design chips."
But the Register remains skeptical about Qualcomm taking over Intel: Chipzilla may not be worth much to Qualcomm unless it can renegotiate the x86/x86-64 cross-licensing patent agreement between Intel and AMD, which dates back to 2009. That agreement is terminated if a change in control happens at either Intel or AMD.
While a number of the patents expired in 2021, it's our understanding that agreement is still in force and Qualcomm would be subject to change of control rules. In other words, Qualcomm wouldn't be able to produce Intel-designed x86-64 chips unless AMD gave the green light. It's also likely one of the reasons why no one bought AMD when it was dire straits; whoever took over it would have to deal with Intel.
Modem Close? (Score:5, Interesting)
Does Intel almost have a working 5G modem?
Intel sells chips for a price.
Qualcomm sells chips for a percentage of gross on the product it's going in.
If Intel were close to a working modem that could spell the end of Qualcomm. Or at least its absurd pricing model.
The patent system slows the progress of Arts and Sciences.
Re: (Score:2)
Why 5G? 6G is the current ratified standard and 7G is in the works. You don't win a race by following the competition. 6G modems already exist, but not many. Intel leapfrogging and hitting 6G will guarantee a huge marketshare. Gambling on 7G is risky, but a win would mean total market domination.
Competing for what's left of the 5G market guarantees high expense and low return.
Re: (Score:2)
Re: (Score:2)
Google confirms that 6G modems exist.
Google confirms 7G is the upcoming standard.
Your problem?
More like no modem at all (Score:2, Informative)
Intel has completely exited the modem space and sold it off to mediatek
Re: (Score:3)
Does Intel almost have a working 5G modem?
No, Intel gave up on the endevour entirely. They quite famously sold the majority of their modem division to Apple [apple.com].
Re: (Score:2)
No, Intel sold their modem division to Apple. Apple's close to having a 5G chip, though likely it's more of a threat to Qualcomm to behave than I think something Apple will drop Qualcomm for.
How the mighty have fallen... (Score:2)
Not that Intel ever had what it takes to compete in a real market.
Re: (Score:2)
1) Intel
2) Intel
3) Intel
4) AMD hahaha they were 3 chip gens behind
4) the unix ecosystem if you had a yyyuuuggeee bank account
Obviously things are different now, but Intel was absolute top dog for a long time.
Re: (Score:3)
Re: (Score:2)
Re: (Score:2)
That's a sad joke. Intel single-handedly proved the industry wrong for at least decade regarding the demise of the x86. Intel crushed every RISC architecture thoughout the 80s and 90s. Modern CPUs owe their design to Intel.
But there was also RAMBUS, and no one wants to work for Intel.
Re: (Score:2)
Intel designs a lot in Israel and lots of engineers there love Intel.
Re: How the mighty have fallen... (Score:2)
Modern CPUs (EM64T/AMD64/x86-64/x64) owe their designs to AMD. Ancient CPUs (IA-32/x86) owe their designs to Intel.
Re:How the mighty have fallen... (Score:4, Interesting)
Re: (Score:2)
When Intel released Core, it was a massive leapfrog. AMD had nothing close. Then AMD leapfrogged. Intel will again next... that is when they realize they have to keep up on non-specialized benchmarks.
Intel, with the right leadership is entirely able to make the next leap. Too bad Gelsinger probably isn't the right choice.
It's a long term commitment. (Score:1)
Manufacturing never turns a profit for years even decades and you have to make a lot of additional crap nobody really needs but is faddish to own.
Ideal solution (Score:5, Interesting)
Intel's product teams merge with Qualcomm. Intel's manufacturing arm is spun out as a new company with the federal government taking a 20% to 25% ownership stake and making its chip facilities have a legal status similar to the military's munitions factories that operate under license to government contractors.
Uh "no" (Score:2)
I'll fully admit I don't know enough about everything the 2 companies produce and where they overlap, but if I was in the Justice department, I'd say "no" simply because of their size. We need more competition in the market and 2 huge companies shouldn't be merging even if there is little overlap. They have enough money to expand on their own if they're doing business right ... if they're not doing business right, then that's their problem. No, I don't believe in "too big to fail".
Hmm (Score:3)
Why can't Frito-Lay buy them? And yes I am serious. It would be cool. What's the negative of it?
Re: (Score:2)
The kind of chips that Intel makes don't do too well when fried in oil.
Facts (Score:2)
Let this be a lesson to all who aren't buying the conventional wisdom.
Layoffs are the direct result of a failure of management. If a company is growing, and especially if it has had major success in the past, there is no need for catastrophic cost-cutting.
Further, management that is so quick to throw people overboard should have been more deliberate and cautious before overhiring in the first place. Competent management never has to preside over significant layoffs.
In a just world, the only person a manager
QA (Score:5, Interesting)
At the moment, x86 is mission-critical and the savage cuts to QA by Intel and AMD have resulted in catastrophic failings that have left critical infrastructure exposed to attack.
Qualcomm aren't exactly known for decent QA either.
Mandate much higher standards for processors, let the companies figure out how to achieve it, and the market to figure out how to pay for it.
If high standards can be achieved with a merger, merge.
If they can't, then don't.
But it's the quality standards that matter, in the current age of open season cyberwarfare, not the badge and not the philosophy.
Everything should be driven by high standards.
Only Reason (Score:2)
Only reason Qualcomm wants Intel is to get all that federal $ earmarked for Intel.
Buy Intel, score $, buy back stock, bonuses for all high lever execs.
Qualcomms recent issues (Score:1)