Qualcomm's Potential Intel Buyout Could Face Antitrust Hurdles, Analysts Reveal: 'Intriguing On Many Levels'

A potential acquisition of  Intel Corp. (NASDAQ:INTC) by Qualcomm Inc. (NASDAQ:QCOM) could speed up Qualcomm’s diversification but may burden the chipmaker with Intel’s struggling semiconductor manufacturing unit.

What Happened: Analysts have expressed concerns that the deal will face rigorous antitrust scrutiny globally, as it would merge two major chip firms, creating a giant with significant market shares in smartphones, PCs, and servers.

Bob O’Donnell, founder of TECHnalysis Research, stated, “The rumored deal between Qualcomm and Intel is intriguing on many levels,” but added that the likelihood of it happening is very low.

Intel, once a dominant force in the semiconductor industry, is currently facing one of its worst periods, with its market value falling below $100 billion for the first time in three decades.

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Qualcomm is expected to fund the deal mostly through stock, which could be highly dilutive for its investors.

Intel’s foundry business is seen as crucial to Washington’s goal of boosting domestic chip manufacturing, having secured about $19.5 billion in federal grants and loans under the CHIPS Act.

Some analysts believe Intel would prefer outside investments instead of a sale, pointing to a recent move to make the foundry business more independent.

Why It Matters: The potential acquisition of Intel by Qualcomm is not just a significant move for the companies involved but also for the broader tech industry. Qualcomm’s interest in Intel’s units has been ongoing, with reports from early September indicating that Qualcomm was considering acquiring certain segments of Intel’s design business to bolster its product line. This move was seen as a strategic effort to enhance Qualcomm’s offerings, especially as Intel struggles with cash generation issues and considers divesting business units.

More recently, Qualcomm’s reported approach to Intel for a potential takeover was reported amid Intel’s significant stock decline, which has dropped by 60%.

Adding another layer to the situation, Apollo Global Management has reportedly proposed a multibillion-dollar investment in Intel, which Intel’s executives are currently evaluating. This proposal could provide Intel with a much-needed financial boost without the complexities of a full acquisition.

Shares of Intel rose 3% before the bell on Monday following media reports of Qualcomm’s early-stage approach. Qualcomm’s shares, on the other hand, were lower.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari