(Bloomberg) — Shares of Intel Corp. rose after the Wall Street Journal reported that Qualcomm Inc. had approached the company about a takeover, a potential record deal for the chip industry.
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The talks have been ongoing for the past few days, the newspaper said, citing unnamed people familiar with the matter. However, a deal is far from certain, the Journal said. Representatives for Intel and Qualcomm declined to comment.
Shares rose 3.4% to $21.87 in New York trading on Friday, rebounding from a decline earlier in the day. The stock remains down 56% this year.
Intel, once the world’s largest chipmaker, is struggling with declining sales and mounting losses — compounded by the loss of its technological edge. The company’s market value of $93.5 billion is now about half that of Qualcomm. Still, an acquisition would be the largest transaction ever for the semiconductor market and would potentially transform the industry.
Shares of San Diego-based Qualcomm fell 2.9%, reflecting investor concerns about the risks of such a deal.
Santa Clara, California-based Intel this week announced a series of changes aimed at getting its business back on track. The moves include a multibillion-dollar deal with Amazon.com Inc. to make a custom AI semiconductor and a plan to spin off Intel’s ailing manufacturing business into a wholly owned subsidiary.
Qualcomm is the world’s largest designer of smartphone processors, but it is trying to branch out into more areas. That includes chips that power PCs, where Intel is still the dominant player.
Like much of the industry, Qualcomm doesn’t do its own chip manufacturing. It outsources production to partners like Taiwan Semiconductor Manufacturing Co., which also makes chips for Nvidia Corp. and Advanced Micro Devices Inc.
The acquisition of Intel could give Qualcomm access to its own manufacturing in the US and also give the company the largest brand in the PC and traditional server computer market.
But Intel’s problems wouldn’t be solved by a takeover by Qualcomm. The potential suitor also lacks experience handling manufacturing or executing the science behind advanced manufacturing technology — an area where TSMC excels.
Qualcomm was involved in a controversial takeover saga more than six years ago, when Broadcom Inc. tried to acquire the company. Broadcom backed out of the bid after President Donald Trump blocked the deal, citing national security risks.
(See the seventh paragraph for more information about Qualcomm’s activities.)
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