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last friday, qualcomm was reported to be planning to acquire intel to create a giant chip company. this pushed intel's stock price up by more than 3% on monday, and many investors believed that the deal was a positive.

however, after careful study, analysts have expressed pessimism about the acquisition. well-known electronics analyst ming-chi kuo said that if the merger really happens, it could be a disaster for qualcomm.

guo mingchi pointed out that qualcomm's acquisition of intel will only help its artificial intelligence computer chip business, and given the current situation, even if qualcomm does not acquire intel, its growth in the personal computer field is only a matter of time. in addition, the acquisition will cause great financial pressure on qualcomm, which will be directly reflected in qualcomm's profitability.

this view has also been affirmed by peers. bob o'donnell, founder of technalysis research, believes that the rumor about qualcomm and intel is very interesting. from a pure product perspective, the merger and acquisition does have its value because the two companies have multiple complementary product lines.

however, he stressed that the possibility of an actual merger is extremely low, and qualcomm is unlikely to take over intel in its entirety. it is more likely to divest intel's chip foundry business, which continues to lose money. however, at present, such a divestiture is not easy to implement.

in addition to these concerns, analysts also pointed out that qualcomm's acquisition of intel is likely to trigger an antitrust investigation. this would be the largest deal in the history of the chip industry and would create a giant with a huge share of the smartphone, personal computer and server markets.

self-rescue turns into suicide?

people familiar with the matter pointed out that qualcomm had approximately us$7.77 billion in cash and cash equivalents as of june 23, so if it wants to acquire intel, it may mainly do so through stock financing and other means, which will greatly dilute the equity of qualcomm investors.

however, the acquisition of intel, a long-established giant, may cause financial difficulties for qualcomm, causing its net profit margin to plummet from the current 20%, or even to show losses. therefore, many analysts hope that qualcomm will think twice before making the move.

in addition, qualcomm has never operated a chip factory, but has outsourced production to partners such as tsmc and received support from chip design companies such as arm. this means that qualcomm does not have the experience and know-how needed to promote intel's foundry business.

bernstein analyst stacy rasgon pointed out that intel's chip factories, especially its several factories in the united states, are politically critical and are unlikely to be abandoned. but qualcomm has no ability to save these factories, so he does not think qualcomm will be a better manager of intel.

other analysts speculated that intel would be more willing to conduct external financing rather than sell, such as its recent announcement that it would make its foundry business independent. in addition, there are reports that apollo global management has provided intel with a $5 billion investment proposal.

in short, wall street is not optimistic about the deal between qualcomm and intel. for intel, qualcomm is not a good partner; and for qualcomm, intel may become a waste in the end.