Published by Uma Rajagopal
Posted on September 24, 2024
4 min readLast updated: January 29, 2026
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By Aditya Soni and Yuvraj Malik
(Reuters) -A potential deal to buy Intel could accelerate Qualcomm’s diversification but will burden the smartphone chipmaker with a loss-making semiconductor manufacturing unit that it may struggle to turn around or sell, analysts said.
A buyout will also face tough antitrust scrutiny globally as it would unite two crucial chip firms in what would be the sector’s biggest ever deal, creating a behemoth with a strong share of the smartphone, personal computer and server markets.
Shares of Intel rose nearly 3% on Monday, after media reports late on Friday about Qualcomm’s early-stage approach for the struggling chipmaker. Qualcomm’s shares were down 1.8%.
The rumored deal between Qualcomm and Intel is intriguing on many levels and, from a pure product perspective, makes a certain degree of sense as they have a number of complementary product lines,” said TECHnalysis Research founder Bob O’Donnell.
“The reality of it actually occurring, however, is very low. Plus, it is unlikely Qualcomm would want all of Intel and trying to break apart the product business from the foundry business right now just would not be possible,” he said.
Once the dominant force in the semiconductor industry, five-decade-old Intel is facing one of its worst periods as losses mount at the contract manufacturing unit it is building out in hopes of challenging TSMC.
Intel’s market value has fallen below $100 billion for the first time in three decades as the company has missed out on the generative AI boom after passing on an OpenAI investment.
As of last close, its market capitalization was less than half that of potential suitor Qualcomm, which has a value of about $190 billion.
Considering Qualcomm had around $7.77 billion in cash and cash equivalents as of June 23, analysts expect the deal will mostly be funded through stock and would be highly dilutive for Qualcomm’s investors, likely raising some apprehension.
Qualcomm, which also supplies to Apple, has quickened its efforts to expand beyond its mainstay smartphone business with chips for industries including automotive and PCs under CEO Cristiano Amon. But it still remains overly reliant on the mobile market, which has struggled in recent years due to the post-pandemic demand slump.
Amon is personally involved in the Intel negotiations and has been examining various options for a deal for the company, sources have told Reuters.
This is not the first time Qualcomm is pursing a large acquisition. It had offered to buy rival NXP Semiconductors for $44 billion in 2016, but abandoned the bid two years later after failing to secure a nod from Chinese regulators.
While Intel designs and manufacturers its chips that power personal computers and data centers, Qualcomm has never operated a chip factory. It uses contract manufacturers such as TSMC and designs and other technology supplied by Arm Holdings.
Qualcomm lacks the experience needed to ramp up Intel’s fledgling foundry business, which recently named Amazon.com as its first major customer, according to analysts.
We do not know why Qualcomm would be a better owner for those assets,” said Stacy Rasgon of Bernstein.
We do not really see a scenario without them either; we do not think anyone else would really want to run them and believe scrapping them is unlikely to be politically viable,” he added.
Intel’s foundry business is seen as crucial to Washington’s goal of growing domestic chip manufacturing. The company has secured about $19.5 billion in federal grants and loans under the CHIPS Act to build and expand factories across four U.S. states.
Some analysts said Intel would prefer outside investments instead of a sale, pointing to a recent move to make the foundry business more independent.
Bloomberg News reported over the weekend that Apollo Global Management, already a partner in Intel’s Ireland facility, has offered an investment of as much as $5 billion in the company.
Qualcomm could also decide to buy parts of Intel’s business, instead of the entire company. Reuters had reported earlier this month that it had particular interest in Intel’s PC design unit.
(Reporting by Aditya Soni and Yuvraj Malik in Bengaluru; additional reporting by Juby Babu in Mexico City and Seher Dareen and Utkarsh Shetti in Bengaluru; Editing by Sriraj Kalluvila)
Antitrust scrutiny refers to the examination of business practices to ensure they do not harm competition or create monopolies in the market.
Market capitalization is the total market value of a company's outstanding shares, calculated by multiplying the share price by the total number of shares.
A foundry is a factory where semiconductor devices are manufactured, often using advanced technology and processes to produce chips.
Diversification is a business strategy that involves expanding into new markets or products to reduce risk and increase growth opportunities.
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