Intel rises after WSJ reports Qualcomm has made a takeover approach

Intel shares rose about 10% in afternoon trading Friday following the WSJ report. It closed up 3.3% on the day and added a little more in after-hours action.

Intel was once the world’s largest chipmaker and a US technology powerhouse. Around 2018, that lead began to crumble as TSMC steadily took over as the chipmaker of choice for most major tech companies, including Nvidia, Apple, and Qualcomm.

Qualcomm makes chips used in smartphones, including Apple’s iPhones, a market that Intel missed out on. Intel mostly sells chips for PCs and data center servers, although Nvidia GPUs have made serious inroads into this lucrative data center business.

A “strange” fit.

Semianalysis chief analyst Dylan Patel said Qualcomm and Intel would be an “odd” match.

“It would lead to a lot of duplicate intellectual property, so there should be significant cost reduction,” he told Business Insider.

“In addition, Qualcomm does not have the ability to change the data center business, which is the most important,” he continued.

Qualcomm would also struggle to improve the Intel Foundry business, Patel added. This foundry business makes chips for other companies and competes (so far ineffectively) with TSMC, which is now the clear world leader.

An Intel spokesman declined to comment. Qualcomm did not respond to a request for comment at the time of publication.

Pat Gelsinger took over Intel as CEO in 2021 and tried to reverse the tech giant’s downward slide. The company’s revenue has fallen in recent years, while rivals such as Nvidia, TSMC and Broadcom are riding the artificial intelligence wave to new heights. Until now, Gelsinger has been perceived as a failure, and the company announced plans for 15,000 layoffs last month.

On Monday, Intel announced a partnership with Amazon Web Services in which the chipmaker will produce custom designs for the cloud giant in what the companies called a “multi-year, multibillion-dollar framework.” Intel shares rose following Monday’s announcement.

Intel has largely missed the AI ​​boom. Its Gaudi 3 AI chip, intended to compete with Nvidia and AMD, is expected to generate only $500 million in sales this year. Nvidia will attract many billions of dollars during the same period.

Qualcomm has made moves to compete more directly with Nvidia in the AI ​​era. The company last year joined a coalition called the UXL Foundation, along with Google and Intel, with the goal of making hardware-independent software to compete with Nvidia’s dominant CUDA platform.