Two chip titans might merge?

Within two weeks, different media outlets have reported that Qualcomm might be considering acquiring Intel.

Intel's stock price surged on Friday this week.

On Friday, September 20th, Eastern Time, during the midday trading session of the US stock market, The Wall Street Journal cited sources as saying that Qualcomm had recently approached Intel regarding an acquisition.

This is the second time this month that the media has reported that Qualcomm is interested in acquiring Intel.

Two weeks ago, Reuters learned that Qualcomm was considering acquiring Intel's chip design business to enrich its product portfolio and was also considering acquiring other businesses of Intel, such as the server business, although this business is of little significance to Qualcomm.

Advertisement

Subsequently, Bloomberg reported on Friday that representatives of Intel and Qualcomm refused to comment.

However, stock market investors quickly reacted to the news.

The stock trends of the two companies were completely opposite.

Intel's stock rose sharply, while Qualcomm's fell.

After the news of having discussed a merger with Qualcomm, Intel's stock price, which had fallen more than 3.7% at its midday low on Friday, rebounded quickly, erasing its losses and turning positive, reaching a daily high of $23.12, up nearly 9.4% from the day's low of $20.35, rebounding about 13.6%.

Due to the excessive stock price fluctuation, trading was temporarily halted.

In the end, Intel closed up 3.3%.

After the news broke, Qualcomm's stock price fell sharply during the trading session, falling from above $170.50 to a daily low of $164.30 in just about 10 minutes, with the daily drop expanding from less than 2% to 5.5%.

The drop narrowed at the end of the day, and it closed down nearly 2.9%.

Since the beginning of this year, up to Thursday's closing, Qualcomm's stock has accumulated an increase of about 20%, while Intel's stock has accumulated a decrease of about 58%.

After rebounding on Friday, Intel's market value at the close exceeded $93 billion.

At this scale, if Qualcomm were to acquire Intel, there would definitely be a risk of regulatory interference.

The Wall Street Journal also mentioned that insiders warned that the acquisition deal is far from certain.

Even if Intel is willing to accept, such a large-scale transaction would almost certainly be subject to antitrust review.

However, the deal could also be seen as an opportunity to enhance the United States' competitive edge in the chip field.

To reach a deal, Qualcomm may plan to sell some of Intel's assets or part of its business to other buyers.

When the news of a possible acquisition by Qualcomm broke, Intel was in the midst of a rare major crisis in its 56-year history.

In early August this year, Intel released what analysts called the "worst earnings report ever" for the second fiscal quarter, with revenue falling back to the mid-2010s, a 1% year-over-year decline in revenue, and a revenue guidance for the third fiscal quarter that could drop by up to 11%, while analysts expected growth of more than 1%.

The company also announced that it would lay off about 15,000 people, accounting for more than 15% of the company's total number of employees, starting from the fourth quarter, and for the first time since 1992, it would suspend dividends.

At the end of August, Chen Lifu, who had been on Intel's board of directors for two years, announced his resignation, adding to the difficulties facing Intel's recovery.

Comments stated that Chen Lifu has rich experience in the semiconductor industry, and his departure will undoubtedly have a negative impact on Intel's future development.

At the beginning of this month, the media reported that Intel's latest 18A manufacturing process reportedly failed Broadcom's tests, making the prospects for the company's foundry manufacturing business to turn a profit even more bleak.

Recently, Intel has been actively brewing plans for "self-rescue."

At the end of August, Wall Street News mentioned that the media reported that Intel was discussing various plans, including splitting its product design and manufacturing business, and cutting factory investment projects.

Morgan Stanley and Goldman Sachs are long-term partners of Intel, and they are providing it with comprehensive strategic advice, including potential mergers and acquisitions.

At the beginning of this month, other media reported that Intel CEO Gelsinger would propose a plan in the middle of this month, including selling businesses that the company can no longer fund, such as the programmable chip department Altera, and the plan may also include suspending or completely stopping its $32 billion factory project in Germany.

This plan aims to reduce the company's overall costs and reshape capital expenditure.

Last week, Intel's board of directors held a three-day meeting, considering a variety of strategic options, including reducing billions of dollars in factory projects, selling some subsidiaries, including previously acquired Mobileye and Altera, and even possibly splitting the core business into an independent company.

CEO Gelsinger's plan includes restructuring Intel's foundry business IFS into an independent subsidiary, considering allowing it to obtain independent external financing; postponing the factory construction plan in Magdeburg, Germany, and Poland by about two years, completing the factory construction plan in Malaysia, and the expansion of factories in the United States is unaffected; streamlining and simplifying the x86 product portfolio; reducing or exiting two-thirds of the global offices by the end of this year; selling part of the stake in Altera.