Qualcomm recently approached Intel to explore a potential acquisition,, in what could be a transformative deal for the chip industry, though it faces significant challenges.
Qualcomm CEO Cristiano Amon is directly involved in negotiations to acquire Intel, a company with a five-decade history, according to Reuters. Another insider confirmed that Amon has been actively exploring various deal options.
Earlier this month, Reuters reported that Qualcomm had considered purchasing parts of Intel’s design business, particularly its PC design unit. Qualcomm executives are reportedly reviewing Intel’s entire portfolio of businesses.
The discussions with Intel are still in the early stages, and Qualcomm has yet to make a formal offer, according to the report.
Qualcomm’s approach comes at a time of weakness for Intel, whose shares have lost nearly 60% of their value this year, despite once being the world’s most valuable chipmaker.
If the deal proceeds, it will likely attract scrutiny from antitrust regulators in the U.S., China, and Europe. Qualcomm may need to divest parts of Intel to secure regulatory approval.
How Qualcomm would manage Intel’s contract manufacturing business remains uncertain. Intel has spent hundreds of billions of dollars and employed tens of thousands of engineers to build its highly precise chip fabrication process.
Qualcomm, which has never operated its own chip factory, currently relies on Taiwan Semiconductor Manufacturing Co. (TSMC) and technology from Arm Holdings.
Intel, once a leader in chipmaking, lost its manufacturing edge to Taiwan’s TSMC and missed out on the generative AI boom dominated by Nvidia and AMD. In an effort to regain momentum, Intel is focusing on AI processors and building a chip contract manufacturing business, known as a foundry.
Following a board meeting, CEO Pat Gelsinger outlined plans to restructure by cutting businesses, pausing factory construction in Poland, Germany and Malaysia, and reducing real estate holdings. Intel also announced a deal to produce a custom networking chip for Amazon’s AWS.