World-historical changes are expected in the smartphone supply chain, as a report in the Wall Street Journal says that leading mobile chipset designer Qualcomm is interested in acquiring Intel and has approached the company for a deal. With a market value of more than $93 billion, a takeover by Qualcomm would surely exceed $100 billion. Qualcomm may need to have already sold some of Intel’s assets to be able to afford this deal.
Intel shares are down 54% this year, while Qualcomm shares are up 20.5% year-to-date. Qualcomm, based in San Diego, is known as a designer that has to turn to a third-party foundry to make their chips because it doesn’t have a manufacturing facility. In the past, Qualcomm has turned to third-party foundries such as TSMC and Samsung Foundry to manufacture the components in its own Snapdragon series chipsets.
Once upon a time the name of Intel rang loudly in all of our ears because it was considered the most valuable chip maker in the world. On Friday, following the publication of a WSJ report citing Qualcomm’s interest in Intel, the latter’s stock rose just before 4 p.m. EDT close to close the week at $21.84, up 70 cents, or 3.31%, for the day. Qualcomm shares did the opposite of Intel as they fell just before the close, down $5, or 2.87%, to $168.92.
While adding Intel’s chips to Qualcomm’s already large lineup will allow the latter to offer chips for a wider range of products from smartphones to computers, the deal will also allow Qualcomm to take on Nvidia, the leader in AI chips. And further to point out that Intel is close to getting $8.5 billion from the US to build foundries in the US Intel is trying to break out of the conventional business of making foundries for third-party “fables” companies, a business in which TSMC dominates and Samsung Foundry follows further behind.
Qualcomm was in talks with Intel to have the company make some of its chips, but Qualcomm decided to drop it for now and Intel failed to build enough business to pour more money into the project. Qualcomm sells Snapdragon application processor chips that help smartphones handle and complete tasks. Their modem chips help connect smartphones to the internet.
While Intel was once the most valuable chip company by market value, it has now fallen behind Qualcomm, Broadcom, Texas Instruments and AMD. Intel even announced last month that it planned to lay off thousands of employees and stop paying dividends.
Alternatively, some have suggested splitting the company into two parts with one company focusing on chip design and the other on chip manufacturing. But that may not be possible right away, as Intel’s manufacturing unit is losing money, and aside from making chips for Intel itself, the company hasn’t been able to generate a steady stream of customers to run the foundry.
We previously knew that the biggest tech acquisition ever was Microsoft’s $69 billion purchase of Activision Blizzard, but if there’s a deal between Qualcomm and Intel, we’ll have news!
Source: myphone.gr
