Qualcomm Rumored to Acquire Intel: A Chip Titan at a Crossroads
Intel, still struggling in the quagmire of transformation, has received a blockbuster news.
Market sources say that Qualcomm is in talks with Intel about an acquisition, although the deal is "far from certain," but the capital market has already reacted.
On September 20th local time, Intel's stock price rose as much as 9.5% to $23.14 in the US stock market, and then narrowed to 3%.
Qualcomm, on the other hand, fell about 3% at the close.
Since September, rumors about Qualcomm acquiring Intel's chip design business have spread in the semiconductor circle.
If this acquisition is finalized, it will become one of the largest technology merger and acquisition deals in history.
Currently, Intel's market value is over $93.3 billion, while Qualcomm's is $188.2 billion.
Intel was once the world's largest chip maker, but it has been in a downward trend for many years and accelerated its decline in 2024.
So far this year, the company's stock price has fallen by 58%.
Qualcomm competes with Intel in several markets, including personal computers and notebook chip chips.
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A person in the chip industry said to the reporter of the First Financial Daily that the merger is the current chip trend, and the capital side can also maximize benefits.
The founder of the Jiwei Network, Lao Ao, said to the reporter, "Intel's foundry should be independent, the IDM model is not suitable for digital systems, it is suitable for analog, otherwise it is difficult to compete with TSMC."
Dai Hui, a senior person in the communication industry, said to the reporter, "Intel's mobile products failed, AI is also in the investment period, the data center server market originally had more than 90% of the market, but cloud computing (with a large amount of demand from the mobile end) has pulled up the chips of the ARM series of competitors.
With the large-scale application of chrome books, the notebook market has also been eroded, so if the chip design field can merge with Qualcomm, it is also a way out."
Dai Hui said that the merger of chip design and Qualcomm, and the separation of Fab factories, may be the best choice for Intel at the moment.
(Screenshot of Intel China's official website) It is worth noting that not long ago, Intel executives have issued a warning about the current situation faced by the company.
In the early morning of September 17th, Beijing time, Intel CEO Pat Gelsinger sent an internal letter to employees, revealing that through voluntary early retirement and resignation, Intel has completed more than half of this year's layoff target, which is about 15,000 people.
At the same time, Pat elaborated on the next stage of Intel's transformation plan, including: the foundry business will become an independent subsidiary, the construction of new factories in Germany and Poland will be suspended, the construction of factories in the United States will continue, real estate will be sold, subsidiaries will be promoted to go public, and financial performance will be improved.
"This is the most significant transformation of Intel in more than 40 years.
Since we transformed from memory to microprocessors, we have not tried such an important thing.
We succeeded at that time - we will meet this moment and build a stronger Intel for the next few decades."
Pat said.
In the industry, although Intel has made frequent business adjustments in the past few years, this traditional chip giant has not yet seized the opportunity brought by AI.
At present, large models are mainly deployed in server clusters in data centers, but Intel's data center and AI business is lagging behind its competitors.
In the first quarter, Intel's data center and AI business revenue was $3 billion, a year-on-year decrease of 8%, and the second quarter was the same as the first quarter, but operating income fell from $500 million to $300 million, indicating that the department's profitability has further declined.
In the same period, Intel's competitors are catching up and ushering in explosive revenue growth brought by AI.
Nvidia announced its first fiscal quarter report in May, with data center revenue of $2.26 billion, a year-on-year increase of 427%, and a quarter-on-quarter increase of 23%.
AMD's second quarter data center business revenue was $2.834 billion, a year-on-year increase of 115%, and a quarter-on-quarter increase of 21%.
In other words, most advanced AI technologies, such as ChatGPT, are running on Nvidia's graphics processors, not Intel's central processors.
Analysts said that Nvidia's market share in rapid growth is more than 80%.
Qualcomm's revenue is lower than Intel's.
In the 2023 fiscal year, the company's sales were $35.8 billion, while Intel's sales were $54.2 billion in the same period.
Nvidia CEO Huang Renxun and AMD Chairman and CEO Su Zhifeng said this year that they will break the "two-year iteration" convention and maintain a "yearly update" chip iteration speed.
To some extent, Nvidia and AMD only need to focus on the chip product itself, and do not need to conquer the process technology in the wafer foundry, which can maintain a faster new product speed.
In addition, unlike Intel, Qualcomm does not produce chips on its own, but relies on companies such as Taiwan Semiconductor Manufacturing Company and Samsung to handle chip production.
Dai Hui believes that although Intel's position in the global data center is very strong, as the originator of IDM, inertia is too large, and high-end chips are better not to take the IDM route.
Dai Hui believes that Intel's burden in the foundry business is too heavy and continues to lose money.
For the foundry business losing $2.8 billion in the second quarter, Intel CFO David Zinsner once summarized the reasons: on the one hand, more than 85% of the wafers still use the nodes before the introduction of EUV lithography machines, resulting in a lack of competitive cost structure; on the other hand, Intel is accelerating the push for Intel 4 and Intel 3 process wafers from the Oregon factory to the Ireland factory production, which will lead to higher wafer manufacturing costs in the short term, and the expansion of the Ireland factory will also affect the profitability of the foundry business.
In addition to losses, Intel is also facing pressure from emerging companies to develop their own chips.
There are reports that OpenAI is working with several chip design companies to develop new chips, hoping to build a new giant with a value exceeding AMD, Nvidia, and Intel.
However, Pat still believes that Intel's capabilities in design and manufacturing are still the competitive advantage and source of strength of this company.
"Now, we have completed the transition to extreme ultraviolet (EUV) lithography technology, it's time to shift from the phase of accelerated investment to a more normal rhythm of node development, and a more flexible and efficient capital plan."
Pat said.
However, the opportunities in the chip market are fleeting, and there is not much trial and error time left for Intel.
However, the acquisition is still far from completion.
Industry insiders say that potential acquisition deals will become complicated due to antitrust and national security issues.
Both Intel and Qualcomm's deals have been rejected by antitrust enforcement agencies, Intel failed to successfully acquire Tower Semiconductor, and Qualcomm also failed to acquire NXP.
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