Qualcomm {{ m-tag option="price" ticker="QCOM" currency="USD" }} has recently initiated talks with Intel {{ m-tag option="price" ticker="INTC" currency="USD" }} about a potential acquisition, reports suggested last week. While such a deal could reshape the semiconductor industry, it will likely face significant challenges.
Qualcomm's CEO, Cristiano Amon, reportedly leads the negotiations with Intel. According to the reports, Amon has been exploring a range of options for the company.

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Specific Interests in Acquisition

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Earlier in the month, reports revealed that Qualcomm had been evaluating a purchase of parts of Intel's design business, with particular interest in its PC design unit. Qualcomm executives have allegedly been reviewing Intel's entire portfolio of companies as part of their considerations.

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Market Conditions

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Qualcomm's approach comes at a difficult time for Intel, once the world's leading chipmaker, but now grappling with a stock price that has plummeted more than 56% since the start of the year.

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Deal Implications

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Should the deal proceed, it would likely attract intense scrutiny from antitrust regulators in the U.S., China, and Europe. Qualcomm could be required to sell off parts of Intel to gain regulatory approval. The acquisition would represent the most significant takeover attempt in the tech sector since Broadcom {{ m-tag option="price" ticker="AVGO" currency="USD" }} $142 billion bid for Qualcomm in 2018.

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Turn of Fortunes and Market Positions

There's been quite a turn in fortunes on both sides. Intel shares have been down more than 50% since the beginning of 2024, and the company was valued at $93 billion on Friday's close before the Wall Street Journal reported Qualcomm's interest. Qualcomm stock is up nearly 20%, valuing it at $188 billion.

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Business Justification for the Acquisition

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Qualcomm would gain diversification. A combination would reduce Qualcomm's reliance on handsets — currently about 75% of sales — by adding revenue from chips for personal computers and data centers.

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Operational and Strategic Challenges

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Intel is a target whose operational and strategic challenges may not be solved simply with new ownership. The key to success is whether Qualcomm could better run its desired purchase.

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