Is Qualcomm Buying Intel? Breaking Down the Rumors

Following news that Qualcomm (QCOM) had considered purchasing parts of Intel (INTC), perhaps including its PC chip design division, the company's shares dropped. According to the people, the mobile chipmaker has looked into buying various parts of Intel, which is having financial difficulties and is trying to sell off other assets and drop business units. Executives at Qualcomm are reportedly quite interested in Intel's client PC design division, but they are also examining all of the company's design units. According to Reuters, on Friday, the manufacturer of semiconductors for mobile devices looked into the possibility of acquiring several Intel components. According to one of its sources, while considering all of Intel's design operations, the PC design unit is of "significant interest."

The most recent article discusses potential acquisition activity for Intel, which is looking to boost interest in its stock

According to one recent piece, it might sell some of its stock in MobilEye (MBLY); another covered its foundry business's choices. Recently, Qualcomm's stock was down more than 3%, while Intel's was down roughly 2%. A spokesman for Intel told Reuters on Friday that the company is "deeply committed" to its PC business and that Qualcomm has not contacted it about potential acquisitions. Qualcomm did not immediately answer an inquiry for comment from Investopedia. Qualcomm's stock has increased by roughly 9% this year, but Intel's stock has seen a 60% decline in value.

The $184 billion For months, Qualcomm, a company best known for its smartphone chips and which counts Apple (AAPL.O) as a client, has been formulating plans to purchase portions of Intel. Plans and interest from Qualcomm are still in the early stages and may change. Last month, Intel revealed the results of a catastrophic second quarter, including a 15% staff reduction and a suspension of dividend payments. Executives are struggling to find cash flow and continue to support the company's manufacturing goals. The board of Intel is scheduled to convene next week to consider a proposal from Pat Gelsinger, the CEO of Intel, and other executives regarding operational reductions aimed at reducing costs. According to Reuters, one of the company's possible choices is to sell its programmable chip division, Altera.

Here is why Qualcomm is About To Acquire Intel

A merger between Qualcomm and Intel might be motivated by several factors, resulting in massive synergies and increasing their market share. With Qualcomm's experience in mobile chips and Intel's leadership in PC and server CPUs, the combined company may be able to appeal to a broader range of markets with a more varied product portfolio. Furthermore, Qualcomm might profit from Intel's well-established manufacturing skills, which would lower costs and increase efficiency. By bringing in fresh resources and prospects, a merger of this kind would help Intel deal with its recent financial difficulties and diminishing market dominance. Qualcomm may also get access to Intel's cutting-edge chip manufacturing technologies, which would allow it to catch up to rivals in terms of technology.

From a strategic standpoint, a combined Qualcomm-Intel company would probably become the leading force in the semiconductor sector, controlling a sizable portion of the market. Their growing size would also strengthen their ability to negotiate better terms with suppliers and customers. While these elements make a merger desirable, several serious obstacles still need to be overcome, such as possible antitrust issues and cultural differences that could make the process more difficult.