According to Bloomberg, Qualcomm has reportedly stepped back from its interest in acquiring Intel, citing the deal's complexity and challenges. While the acquisition would have been historic in its significance and scale, Qualcomm is now exploring other ways to expand, potentially targeting parts of Intel, as reported before.
Intel's market capitalization — currently at $102.38 billion — highlights the magnitude of the deal Qualcomm had considered. Adding a 20% premium would have made this takeover one of the biggest acquisition deals ever. If completed, it would have become the largest technology company acquisition, surpassing Broadcom's 2023 purchase of VMware. The deal would have created one of the world's largest high-tech companies with vast capabilities across various markets.
From the standpoint of industry megatrends, a match between Intel and Qualcomm would have made a lot of sense. Qualcomm has 5G application processors for smartphones and processors for PCs, yet for now, Qualcomm is not a big player on the PC front. By contrast, Intel is the largest supplier of CPUs for PCs. At the same time, Intel is absent from consumer 5G devices (something it sold to Apple years ago, and that division has to develop a competitive modem, which, given the complexities of 5G modems, is hard). Yet, Intel's processors are used in 5G base stations and data centers.
Intel has its AI and HPC strategy, but it has yet to prove that it works. By contrast, Qualcomm has nothing to offer when it comes to high-performance AI and HPC for data centers.
While Intel is losing market share to AMD in the data center space, with its world-class brand and vast production capacity, it outpaces AMD in the client PC space and still produces the majority of data center CPUs. This advantage will remain for as long as Intel has its manufacturing capacities.
However, the proposed acquisition faced significant obstacles, including Intel's $50 billion debt, dropping CPU market share, and its struggling semiconductor manufacturing unit, an area where Qualcomm lacks expertise. A deal of this magnitude would also likely trigger extensive regulatory scrutiny, particularly in China, a key market for both companies.
Intel is undergoing significant restructuring under CEO Pat Gelsinger to reclaim its competitiveness in the semiconductor market in terms of products and process technologies. Still, for now, both Intel and Qualcomm are quite successful standalone companies. While the combination would make a formidable firm (probably facing unprecedented antitrust scrutiny), it does not make much sense for Qualcomm to make such a massive takeover. These factors have collectively made a complete takeover less appealing to Qualcomm. Meanwhile, selling off a part of the company to Qualcomm may not make sense for Intel.
Qualcomm aims to generate $22 billion in annual revenue by 2029 by expanding into markets like personal computers, networking, and automotive chips. Although Cristiano Amon, Qualcomm's chief executive, has stated that his company did not need a major takeover to achieve this goal, the company initiated preliminary discussions with Intel regarding a potential acquisition in September. Yet, it does not look like the deal is going to happen.
