Why did Intel stock pop today?

There is no end to the excitement for Intel (INTC 3.31%)it seems. After shares rose earlier this week to a partnership with Amazon and a $3 billion contract with the Department of Defense, jumped again late Friday on reports that Qualcomm (QCOM -2.88%) has approached its rival about a possible takeover, indicating that the struggling semiconductor company could be in play.

Intel shares rose 3.3% on the news, after rising as much as 9.5% when the story first broke. Qualcomm closed down 2.9 percent after sinking 6 percent earlier, showing that Qualcomm investors didn’t like the idea of ​​a relationship between the two chip giants.

Image source: Getty Images.

Could Qualcomm buy Intel?

Just before the markets close, The Wall Street Journal reported that Qualcomm approached Intel about an acquisition in recent days. Such a deal, if cleared by regulation, would be one of the largest in the history of the technology industry.

The news took investors by surprise, as Intel has not said it is looking at “strategic options” such as an acquisition and is working on a massive restructuring that includes laying off 15 percent of its workforce. Shares tumbled in early August when it announced the news, which also included disappointing second-quarter results, weak guidance and the elimination of its dividend.

It’s unclear what Qualcomm’s goal would be in an acquisition, though it likely sees an opportunity to consolidate a dominant position in the PC market. However, Qualcomm is best known for its wireless components.

Given the struggles in Intel’s foundry business, Qualcomm could try to sell that business if a deal were to be reached.

What it means for Intel

A deal appears unlikely to go through, and CEO Pat Gelsinger would likely be reluctant to sell the company with shares trading near 20-year lows.

Still, the news raises a perspective that investors haven’t fully considered. Perhaps Intel would be best off opening a bidding war for the company, as there would likely be multiple suitors. I think it would take more failures at the company before that happens, but investors like the idea of ​​an interested buyer.

Stay tuned for more developments around Intel as chip stock news moves fast.