Qualcomm in Talks With Intel Over Acquisition: What Does the Future Hold for Intel?

Qualcomm has held talks with its rival Intel over a potential acquisition of the struggling Silicon Valley Company.

As per media reports, Qualcomm is yet to make an offer to Intel, however, there are significant obstacles as far as a possible deal is concerned, people in the know reportedly said as per The Wall Street Journal.

With Qualcomm in talks with Intel, what does the future hold for Intel and what are the chances of the deal going through?

Intel's Struggles

Intel's problem began in early August when it reported a $1.6 billion quarterly loss. It also announced to cut around 15,000 jobs. Intel had seen its shares fall by nearly 40 per cent over the last year. It has a market capitalisation of $93 billion.

It had failed to capture the market with respect to selling chips for mobile phones and the big boom that had arisen with the advent of Artificial Intelligence.

Arch-rival Nvidia has capitalised on the AI market and has become the most valuable company in the world overtaking Microsoft.

Intel, also, lost its largest customer Apple in 2020 after Apple made its transition from Intel-based processors to making its own M-series chips which are custom-designed and built on the ARM architecture.

Intel's chip manufacturing services, which was once at the forefront of the technology lost out to Taiwan Semiconductor Manufacturing Company (TSMC). It also announced that it would pause the setting up of plants in Germany and Poland.

Qualcomm's Growth Plans

The San Diego-based Qualcomm is known for designing and manufacturing semiconductors and wireless telecommunication products. They also produce processors that power up Android smartphones such as Snapdragon processors. It has recently released the Snapdragon X Pus and Snapdragon X Elite chips, known for their AI capabilities and features.

Qualcomm, unlike Intel, does not manufacture its chips and relies on Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung. Getting hold of Intel would be of great advantage to Qualcomm as it hopes to strengthen its presence in the PC and server markets.

Patrick Little, a former Qualcomm executive, currently the CEO of SiFive, a start-up that sells microprocessor designs reportedly said that if Qualcomm worked with or acquired a portion of intel, it would help the company accelerate its strategy and expand its presence.

Will the deal go through?

It would have been unimaginable for a chipmaking rival to buy intel many decades ago. Years of mismanagement and missteps in technology transitions have undermined what was once one of Silicon Valley's formidable companies.

The deal would reportedly be subject to enormous regulatory scrutiny given the mammoth size and national security of both companies. As per media reports, that deal could face an anti-trust review as Intel's design and manufacturing operations are integral for defence applications and US competitiveness in semiconductors.

It is also uncertain whether the regulators would let Qualcomm acquire Intel without taking over its failing business and it also equally remains to be seen if Qualcomm would want to take on the humongous endeavour.