(Bloomberg) — Qualcomm Inc. will likely wait until after the U.S. presidential election in November before deciding whether to make a bid to buy Intel Corp. to buy, say people familiar with the matter.
Most read from Bloomberg
San Diego-based Qualcomm wants more clarity on the new occupant of the White House before deciding on its next move because of the impact a future administration would have on the antitrust landscape and the U.S. relationship with China, according to the people who asked for it was not established that he discussed confidential information.
Qualcomm may choose to wait until after the inauguration of the new U.S. president in January before deciding how to proceed, given the many complexities of a potential transaction involving Intel, some people said.
A combination of Qualcomm and Intel, whose products are key to the digital framework that underpins everyday life – from smartphones to electric vehicles – would almost certainly receive intense attention from antitrust regulators in the US and around the world. This also applies to China, an important market for both Qualcomm and Intel.
Intel shares fell 3.3% in premarket trading in New York on Wednesday.
Qualcomm made a preliminary approach to Intel in September about a possible acquisition of its struggling rival. The same month, the company made informal inquiries with antitrust regulators in China to gauge their position on a potential deal, some people said. Qualcomm has not received any feedback from Chinese authorities, who are waiting to see if the company actually makes a formal offer, they said.
Intel is at the heart of the US government’s plan for a domestic chip manufacturing renaissance, making political support for any deal crucial. The Biden administration has consistently framed the importance of its chip manufacturing policy in terms of national security. Intel is poised to get the largest allocation of funding under the Chips and Science Act of 2022 if it goes ahead with all of its factory construction plans. Qualcomm has spoken to U.S. regulators and believes an all-American combination could address any concerns, people familiar with the matter previously said.
Making a bid after the election could bring even more benefits to Qualcomm. Intel will report third-quarter results later this month. If that follows the pattern of the disappointing announcement three months ago and the impact it had on the potential target’s stock price, it could make a deal significantly cheaper for Qualcomm. This time, analysts are once again predicting a net loss of more than $1 billion for Intel.
Qualcomm’s deliberations are ongoing and there is no certainty the company will decide to make a bid for Intel and the timing could change, the people said. Representatives from Qualcomm and Intel declined to comment, while China’s State Administration for Market Regulation did not respond to requests for comment.
Under Chief Executive Officer Pat Gelsinger, Intel has been working on an expensive plan to remake itself and bring in new products, technology and external customers. As part of a recently announced shakeup, Intel plans to spin off its programmable chip division into a standalone company and sell shares to the public or find an investor for it.
Apollo Global Management Inc. has offered to make a multibillion-dollar investment in Intel, Bloomberg News reported last month, giving the chipmaker a vote of confidence in its turnaround strategy and a possible alternative to a possible takeover by Qualcomm.
–With help from Liana Baker, Ian King, and Zheng Wu.
(Updates with premarket shares)
Most read from Bloomberg Businessweek
©2024 BloombergLP
