Intel The Corp.’s shares rose after the Wall Street Journal reported that Qualcomm Inc. has contacted the company about an acquisition, a potentially record-breaking deal for the chip industry.
The talks took place in recent days, the newspaper reported, citing anonymous people familiar with the situation. Nevertheless, a deal is anything but certain, the Journal said. Representatives from Intel and Qualcomm declined to comment.
Shares rose 3.4 percent to $21.87 in New York trading on Friday, recovering from a decline the day before. The stock is still down 56 percent this year.
Intel, once the world’s largest chipmaker, is struggling with falling sales and rising losses – exacerbated by the loss of its technological lead. The company’s market capitalization of $93.5 billion is now about half that of Qualcomm. Nevertheless, a takeover would be the largest transaction of all time in the semiconductor market and could fundamentally change the industry.
Shares of San Diego-based Qualcomm fell 2.9%, reflecting investor concerns about the risks of such a deal.
Intel, based in Santa Clara, California, announced a series of changes this week to get the business back on track. The measures included a multibillion-dollar deal with Amazon.com Inc. is set to produce a customized AI semiconductor and plans to convert Intel’s struggling manufacturing business into a wholly owned subsidiary.
Qualcomm is the world’s largest developer of smartphone processors, but is trying to expand into other areas, including chips that power personal computers, where Intel is still the dominant supplier.
Like most of the industry, Qualcomm does not operate its own chip production. The company outsources production to partners such as Semiconductor manufacturing in Taiwan Co., which also produces chips for NVIDIA Corp. and Advanced micro devices Incl.
By acquiring Intel, Qualcomm could potentially gain access to its own production in the US while becoming the largest brand in the PC and traditional server computer market.
But Intel’s problems would not be solved by a takeover by Qualcomm. The potential suitor also has no experience in manufacturing or the science behind cutting-edge production technology – an area in which TSMC excels.
Qualcomm was involved in a controversial takeover saga more than six years ago when Broadcom Inc. attempted to take over the company. Broadcom withdrew from the offer after President Donald Trump blocked the dealand pointed to risks to national security.