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recently, some media quoted insiders as saying that us chip giant qualcomm recently expressed its acquisition intention to its competitor intel.

on the morning of september 21, the reporter of the national business daily contacted qualcomm and intel to learn about the situation. as of press time, qualcomm has not responded, and intel said that it would not comment on the rumors. on september 20, local time, intel's stock price rose by more than 8.8% during the intraday trading, reaching a high of $23.14 per share, and closed at $21.84 per share, a daily increase of 3.31%.

as we all know, qualcomm is the current global leader in mobile phone chips, and its chips are widely used in mobile phones such as apple, oppo, vivo and xiaomi, while intel's chips can be found everywhere in personal computers and servers, but in recent years it has not been as popular as qualcomm. as of now, intel's market value exceeds us$93.3 billion, while qualcomm's is us$188.2 billion.

"intel's wafer fabs are very important assets. if qualcomm acquires intel, it can make good use of the wafer fabs to make chips for qualcomm's mobile phones and cars, and its production capacity will be more sufficient. at this stage, qualcomm mainly makes chips through samsung and tsmc. at the same time, qualcomm's acquisition will also be beneficial for their entry into the pc field." a securities analyst told reporters.

in addition, it is worth noting that given the huge scale of the two chip manufacturers, if the two parties were to trade, it would most likely attract strict antitrust scrutiny, which means there would be great obstacles to reaching a deal.

intel is facing its biggest transformation in more than 40 years

in early august this year, intel announced its second quarter financial report for fiscal year 2024: revenue was $12.8 billion, down about 1% year-on-year; attributable net loss was about $1.6 billion, while attributable net profit in the same period last year was about $1.5 billion, turning from profit to loss year-on-year. in addition, intel also announced a layoff plan to save costs.

image source: screenshot of announcement

in the early morning of september 17th, beijing time, intel ceo pat gelsinger sent an internal letter to employees, announcing intel's subsequent important actions, including: the foundry business becoming an independent subsidiary; suspending the construction of new factories in germany and poland, and continuing to advance the construction of factories in the united states; maximizing the value of the x86 architecture, etc.

at the same time, he also announced the expansion of the strategic partnership with amazon, which includes joint investment in custom chip design. "intel foundry will produce ai chips for amazon on intel 18a, and we will also produce customized xeon 6 chips on intel 3 based on our existing partnership, under which intel produces xeon scalable processors for amazon. more broadly, we expect to work in depth with amazon on additional designs including intel 18a, intel 18ap, and intel 14a." in addition, pat also revealed that through voluntary early retirement and resignation, intel has completed more than half of its goal of laying off 15,000 people by the end of the year.

image source: webpage screenshot

“this is intel’s most significant transformation in more than 40 years. we haven’t attempted anything this significant since our transition from memory to microprocessors. we succeeded then — and we will rise to this moment and build an even stronger intel for decades to come,” said pat.

despite intel's frequent business adjustments, the above-mentioned securities analysts believe that this traditional chip giant still faces many difficulties.

currently, qualcomm and intel compete in multiple markets, including computer chips and automotive chips, but their models are different. intel has always been an idm (integrated device manufacturer) model, not only designing chips but also producing them, while qualcomm is a fabless (no wafer factory) enterprise, which does not produce chips itself but relies on tsmc, samsung, etc. if qualcomm acquires intel, qualcomm will increase its own manufacturing capabilities, thus affecting the competitive landscape of the foundry market.

not only that, in the field of computer hardware, the two mainstream cpu architectures are x86 and arm. the x86 architecture, also known as cisc (complex instruction set computer), mainly serves the pc and server industries; while the arm architecture, which stands for risc (reduced instruction set computer), dominates the field of mobile devices. in the past, qualcomm has been committed to the research and development of chips based on the arm architecture, while intel mainly uses the x86 architecture. in the data center market of the x86 architecture, intel once accounted for more than 90% of the market share. if qualcomm acquires the related business of the x86 architecture, it means that the company will dominate the mobile and pc fields.

acquisitions between giants often face difficulties in antitrust review

if qualcomm acquires intel, it will undoubtedly strengthen the competitive advantage of american chips, but such a large acquisition also has great uncertainty. even if both parties are interested, it still needs to go through strict antitrust review. in the past, several large semiconductor acquisitions almost all ended in failure.

in 2017, broadcom offered more than $100 billion to acquire qualcomm, but the deal was ultimately halted by the trump administration due to national security issues.

in late july 2018, at the deadline for qualcomm's acquisition of semiconductor manufacturer nxp, the 21-month acquisition was terminated because china's state administration for market regulation did not give a "permission" response.

according to a previous report by china national radio, qualcomm's acquisition of nxp has attracted much attention, in large part because nxp is one of the world's largest semiconductor manufacturers. after acquiring freescale, the company has become the world's largest mcu (microcontroller unit) and automotive chip supplier. once qualcomm's acquisition is successful, qualcomm's business will expand to automotive electronics, identity recognition, radio frequency and other fields.

in 2021, nvidia's attempt to acquire arm was also blocked by the us federal trade commission due to antitrust issues. after that, the deal was officially terminated in 2022.

whether qualcomm's acquisition of intel can proceed smoothly remains to be seen.

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