- Reports surfaced Friday that Qualcomm is eyeing Intel’s assets
- If Qualcomm were to try to acquire Intel, regulators in multiple jurisdictions would surely block it
- Shares in Intel were up today and Qualcomm shares were down, if that tells you anything
It’s far from clear how Qualcomm would merge with Intel, as multiple reports suggest it’s trying to do. The cost of a deal is unknown, as well as whether Qualcomm would try to subsume Intel whole or just break off parts of the company.
Fierce Network can predict, however, that regulatory authorities from here to China will be screaming bloody murder about any proposed deal. Not only that, but any such deal would be negative for fledgling open radio access network (RAN) efforts and 5G chip development going forward.
In case you missed it, here’s the TL;DR version: On Friday, the Wall Street Journal reported that chip giant Qualcomm made a takeover approach to Intel, which has been suffering through one of the most significant crises in its 50-year history. It’s unknown how Intel reacted. One thing is clear: It would come under close antitrust scrutiny, both in the U.S. and abroad.
Strike while Intel’s down?
Shares in Intel were up slightly today, to $22.58, after a report over the weekend that asset management company Apollo Global Management offered to make an investment of as much as $5 billion in Intel, providing a vote of confidence in Intel’s turnaround strategy. Qualcomm shares were down less than 2% today, trading at $165.82.
Intel shares have lost 60% of their value since the start of 2024. Qualcomm has a market value of $188 billion compared to Intel’s value of about $93 billion.
To be sure, Qualcomm’s interest in Intel is tied to the PC market and not mobile phones, which is where Qualcomm dominates. It’s not at all clear what Intel would want to give up – surely not its crown jewels in laptop chips, noted Chetan Sharma, founder of Chetan Sharma Consulting.
Sharma hosted Intel executives as part of his Mobile Future Forward 2024 event in Seattle earlier this month. He remembers 10 or 12 years ago when Qualcomm was having a tough time and the chatter then was about Intel acquiring Qualcomm.
How times have changed.
While it’s struggling now, Intel isn’t at a point where it’s ready for a fire sale, he said. With a sharper focus, its PC and server business can survive and thrive, and a stronger Intel is just plain good for customers and the entire ecosystem.
“I don’t see where Intel is at a point where it needs to sell itself whole,” Sharma said. “It’s not at that point yet.”
Having said that, it’s the board’s duty to look at every possible scenario and act on the part of shareholders. Intel might want to get some cash for selling pieces of its business and/or it might consider spinning off something, but the core business remains valuable, he said.
“I just don’t see this as a credible option for Qualcomm to take on Intel,” he said. Even if the business justification is there, regulators in the U.S., U.K. and “definitely in China” are not going to be interested in approving it. Both have significant business in China.
Jack Gold, founder of J.Gold Associates, is of a similar view in that he doesn't think Qualcomm would want Intel in its entirety. "I just don’t see [Qualcomm] wanting to absorb Intel in whole. If they got some of the pieces, like the networking group, that might make sense. But to digest the entire company would be, in my opinion, a mistake," he told Fierce.
Bad for open RAN
If Intel were removed, it would be a bad for the open RAN movement, which has struggled to make inroads. Dish Network and Rakuten are a couple prominent Intel partners in the open RAN space, and Intel continues to play a significant role in the Telecom Infra Project (TIP), the Facebook-initiated organization driving open RAN solutions.
It doesn’t look like Qualcomm is all that interested in the open RAN segment given that it’s not a multi-billion dollar market, although it could become significant at some point, Sharma said.
Most of the open RAN deployments use Intel’s x86 architecture and not Arm, though that could change, said Daryl Schoolar, analyst at Recon Analytics. For example, T-Mobile announced last week that it’s working with Nvidia to bring AI into the RAN, and that’s based on the Arm architecture.
And when it comes to AI? Both Qualcomm and Intel are years behind Nvidia.
5G monolith ahoy?
If a Qualcomm-Intel merger were to happen, it would create a wide-scale 5G monolith. Qualcomm already supplies many 5G device vendors with modems and chipsets, from smartphone vendors to Internet of Things (IoT) device suppliers. Note how difficult it has been for Apple to move off Qualcomm 5G modems for its iPhones.
Intel, meanwhile, has a sizeable share of the 5G infrastructure market, providing many operators and vendors – such as Ericsson and Samsung – with its 5G Xeon server chips and other silicon for 5G infrastructure. So between Qualcomm and Intel, the pair would constitute a 5G behemoth.
"The combination of both would be quite formidable across server, desktop, and mobile product lines and cover both handsets and the new generation of base stations and span both the x86 and Arm architectures," AvidThink principal analyst Roy Chua noted in an email to Fierce.
But again, we may be putting the cart before the horse.
“I feel like it’s more speculation than anything,” Sharma said. Regulatory-wise in the U.S., U.K. and China, “it faces significant hurdles and I think for that reason, it’s unlikely to pursue it.”
Further reading: Check out Fierce Electronics' coverage here.