Chip giant Qualcomm Inc. QCOM reportedly approached its struggling competitor Intel Corp. INTC for a possible takeover.
What Happened: Qualcomm’s takeover attempt was in recent days, which if it goes through, would be monumental given Intel’s market value of roughly $90 billion, reported The Wall Street Journal, citing people familiar with the matter.
However, the deal is far from a sure thing, with potential antitrust scrutiny posing a significant obstacle.
Intel, once the world’s most valuable chip company, has seen its shares plummet by about 60% this year.
The company’s market value was above $290 billion as recently as 2020. Qualcomm, on the other hand, has a market value of around $185 billion.
A potential deal would significantly broaden Qualcomm’s scope, supplementing its mobile phone chip business with Intel’s chips, which are widely used in personal computers and servers.
Both companies are striving to take advantage of the artificial intelligence boom, but they have been eclipsed by AI chip giant Nvidia Corporation NVDA.
Intel has been dealing with significant crises, including a disappointing quarterly report in August, which led to plans for layoffs and a halt in dividend payments.
The company also reported a loss of $1.6 billion for the second quarter, compared with a $1.5 billion profit a year earlier.
Qualcomm’s approach follows a more than three-year turnaround effort at Intel under CEO Pat Gelsinger that has yet to yield significant results, the report noted
If the takeover is successful, it would rank as the all-time largest technology M&A deal, surpassing Microsoft Corporation’s $69 billion acquisition of Activision Blizzard.
Why It Matters: In August, Intel posted quarterly earnings of 2 cents per share, falling 80% short of the analyst consensus estimate of 10 cents and reflecting an 84.62% decline from the same quarter last year.
Revenue for the quarter was $12.83 billion, slightly below the expected $12.94 billion and down 0.9% year-over-year.
The Data Center and AI segment brought in $3 billion, a 3% decline, while Client Computing revenue rose 9% to $7.4 billion, and Network and Edge revenue slipped 1% to $1.3 billion.
On the other hand, Qualcomm has been performing well, with a third-quarter earnings report highlighting an 11% year-over-year revenue increase.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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