(Bloomberg) — Qualcomm Inc.’s interest in pursuing Intel has waned, according to people familiar with the matter, upending what could have been one of the biggest technology deals in history. That’s what it means.
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The complexities involved in buying all of Intel make it less attractive for Qualcomm, said some of the people, speaking on condition of anonymity to discuss confidential matters. There’s always the possibility that Qualcomm could instead look to parts of Intel or reignite its interest later, they added.
The Intel acquisition would rank among the largest acquisitions in history based on current market value. If successful, the acquisition would be the largest acquisition of a tech hardware company, surpassing Broadcom’s acquisition of software maker VMware in 2023. It could also have helped reshape the semiconductor industry and create a larger chip leader in the United States. This comes at a time when governments around the world are racing to increase domestic supplies.
Intel shares fell about 1% in premarket U.S. trading. Representatives for Qualcomm and Intel declined to comment.
Bloomberg News and other news outlets reported in September that Qualcomm had made a preliminary approach to Intel about a possible acquisition. The announcement came just weeks after Intel released a disappointing earnings forecast and a damning earnings report that outlined a 15% reduction in headcount due to “resizing and refocusing.”
But the deal faced a number of financial, regulatory and operational hurdles, including Intel’s assumption of more than $50 billion in debt. It would likely require a long and difficult antitrust review, including in China, an important market for both companies.
Qualcomm would have had to deal with Intel’s loss-making semiconductor manufacturing division, which it had no experience with.
Qualcomm is eyeing new markets such as personal computers, networking and automotive chips to generate an additional $22 billion in annual revenue by fiscal 2029.
“Right now, we have not identified any major acquisitions that we would need to make this $22 billion,” Cristiano Amon, the San Diego-based company’s chief executive, said in an interview on Bloomberg TV last week. Ta. ”
“More together”
Until relatively recently, Intel was one of the largest chipmakers by value, but now it’s in the midst of reinventing itself. Rivals such as Nvidia are falling behind in the race to supply chips to meet massive demand for artificial intelligence.
The Santa Clara, California-based company has a market value of approximately $107 billion. This is despite the company’s stock price having fallen about 51% since the beginning of the year. The Biden administration has finalized an agreement that will give Intel approximately $7.9 billion in federal aid, the largest direct subsidy under the Domestic Semiconductor Manufacturing Promotion Program.
Bloomberg intelligence statement
The reduction in CHIPS Act subsidies from $8.5 billion to less than $8 billion should not significantly impact Intel’s capital spending trajectory or manufacturing progress, although implementation challenges remain. is. The suspension of dividends and the realignment of capital expenditures created a sufficient liquidity cushion, and the $3 billion contract with the Department of Defense was delivered in excess of what was previously envisaged in the CHIPS Act.
– Kunjan Sobani, Oscar Hernandez Tejada, Analysts
Click here for research.
Intel CEO Pat Gelsinger said in an interview in early November that he intended to keep the company united and that he had board support for the plan. He said there was a “huge amount of energy and passion” to put into it.
“Obviously there’s a lot of attention on Intel. This highlights how central Intel is in the technology industry,” he said during an interview. “We believe that strategy is a combination of clear and better strategies.”
Intel is in talks with potential investors for Altera programmable chip units. The process is expected to be completed early next year. Bloomberg News previously reported that Lattice Semiconductor is interested in making a bid for all of Altera, while private equity firms are interested in taking a minority stake.
(Updated stock and Intel grants starting in 3rd paragraph)
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