Intel wins report that Qualcomm has made a takeover approach

(Bloomberg) — Shares of Intel Corp. rose after the Wall Street Journal reported that Qualcomm Inc. approached the company about a takeover, a potential record-setting deal for the chip industry.

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The talks took place in recent days, the newspaper said, citing unnamed people familiar with the situation. Even so, a deal is far from certain, according to the Journal. Intel and Qualcomm representatives declined to comment.

Shares rose 3.4 percent to $21.87 in New York trading on Friday, recovering from early-day declines. The stock remains down 56% this year.

Intel, once the world’s largest chipmaker, has struggled with sales and mounting losses – exacerbated by the loss of its technological edge. The company’s market valuation, at $93.5 billion, is now about half that of Qualcomm. Still, a takeover would be the largest-ever deal for the semiconductor market and could transform the industry.

Shares of San Diego-based Qualcomm fell 2.9 percent, reflecting investor concerns about the risks of such a deal.

Santa Clara, Calif.-based Intel this week announced a series of changes aimed at reviving its business. The moves included a multibillion-dollar deal with Amazon.com Inc. to make a custom AI semiconductor and a plan to turn Intel’s struggling manufacturing business into a wholly owned subsidiary.

Qualcomm is the largest designer of smartphone processors in the world, but it has tried to expand into several areas. These include chips that run personal computers, where Intel is still the dominant player.

Like much of the industry, Qualcomm does not manufacture its own chips. It outsources production to partners such as Taiwan Semiconductor Manufacturing Co., which also makes chips for Nvidia Corp. and Advanced Micro Devices Inc.

Acquiring Intel could give Qualcomm access to its own manufacturing in the US, as well as give it the largest brand in the market for traditional PCs and server computers.

But Intel’s problems wouldn’t be solved by a Qualcomm takeover. The would-be contender also has no experience handling production or doing the science behind cutting-edge manufacturing technology — an area where TSMC excels.

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Qualcomm was embroiled in a contentious takeover saga more than six years ago when Broadcom Inc. tried to acquire the company. Broadcom dropped the request after President Donald Trump blocked the deal, citing national security risks.

(Updates with more on Qualcomm’s operations in the seventh paragraph.)

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