Qualcomm wants to Buy Intel… It has been the media bombshell of the weekend in terms of technology and according to American media there is already an acquisition offer on the table that, if it goes through, would turn the history of technology upside down.
Intel, the big ‘chip giant’, has firmly dominated the semiconductor market for the past three decades in markets such as servers and client computing with its x86 solutions and the support of Microsoft with Windows in what came to be called ‘Wintel’. But nothing lasts forever Intel’s own mistakes (the transition from production to 10nm was terrible) have been compounded by the rise of other companies that have been taking bites out of its business and opening up new ones where Intel has not been able to access.
One of them is ARM, an architecture that has entered strongly into PCs (especially thanks to Apple) and another has been NVIDIA as a producer of server accelerators. But the worst came from the huge mobility market where Intel, incomprehensibly, was unable to obtain sales of any kindToday, when you count mobile phones, tablets and wearables, mobility can easily multiply the installed base of PCs tenfold. Not to mention specific devices such as video game consoles, which may not generate much revenue, but can expand the business model.
The result of all this is that Intel Corporation is going through one of the worst times in its history. It is registering significant drops in revenues and profits, is preparing a program of thousands of layoffs (there is talk of 15,000 in addition to the previous ones), plans to stop investments in new production plants in Europe and Its fall on the stock market has been brutal40% in the last year. Enough to leave it in the hands of other sharks…
Qualcomm wants to buy Intel, is it possible?
For veterans who have known Intel in its best moments, it seems impossible to think of a sale to Qualcomm that Until a few years ago I would not have even dreamed of performing this operation.. Not Qualcomm, not anyone else. But numbers are numbers. Intel is worth $90 billion on the stock market, while Qualcomm is double that with a market capitalization of $184 billion, after rising 55% over the past year. And it continues to rise, while investors have lost confidence that Intel’s current management can turn things around.
For Qualcomm, the merger would combine its vast expertise in mobile chip technology with Intel’s strong presence in processors for personal computers and servers. The acquisition would represent a major strategic shift for Qualcomm, diversifying its portfolio and strengthening its position in a changing technology landscape that is now driven by everything that speaks and smells of artificial intelligence.
Qualcomm and Intel have declined to comment, but the Wall Street Journal and then the New York Times said there have been talks and Qualcomm has even put an offer on the table that would become the largest operation in the history of the technology industry exceeding $100 billion.
If financial considerations are of the highest profile, The strategic and regulatory ones are no less so. which would surely intervene. Intel is not the Intel we knew, but it is still much more than just a chip manufacturer. Both in terms of intellectual property and as a guarantor of what they call ‘National Security’. The presence of its chips in Intelligence and Defense data centers is enormous.
What about a partial sale without the manufacturing division?
Another possibility that has been discussed is a partial sale of some of Intel’s divisions. The most obvious is that of Altera, the programmable chip unit that has been a failure and that could be sold to a third party specializing in this type of development.
Qualcomm’s interest would be more in client computing, PC chips, software and channels to sell personal computers. And we are talking about designs because -before the sale- Intel could spin off its manufacturing division. IDM 2.0 has meant one of the biggest business strategy changes in the history of the chip giant, as it has meant the company’s entry into the foundry business, or the manufacturing of semiconductors for third parties on request. IFS operates as an independent business unit and is responsible for manufacturing chips on request for third parties under the two dominant architectures, x86 and ARM, and in the future also for the third and promising RISC-V.
Foundries like TSMC have the lion’s share of the business here and it won’t be easy either. But, What if Intel ends up as a chip manufacturer for third parties? The case is worthy of much analysis and we will have the opportunity to do so. We will see. Intel and Qualcomm have not issued any public statement on this information, which goes beyond a rumor and may have major consequences for the industry, companies and consumers. This operation would be a real change of era..