In Short:
Qualcomm is considering acquiring parts of Intel’s design business to enhance its product lineup. Intel is struggling financially and looking to sell assets, with Qualcomm particularly interested in its PC design sector. Although discussions aren’t finalized and Qualcomm hasn’t approached Intel yet, they have been exploring this for months. Meanwhile, Intel is focusing on its PC operations and addressing declining revenue.
Qualcomm is currently evaluating the opportunity to acquire certain segments of Intel’s design business with the intention of enhancing its product offerings. This information comes from two sources familiar with the discussions.
Focus on Intel’s Client PC Design Business
The mobile chip manufacturer has shown particular interest in acquiring various components of Intel, which is facing financial challenges and is exploring options to divest certain business units and sell off other assets. Among the various segments, Qualcomm executives are particularly interested in Intel’s client PC design business; however, they are considering all of the company’s design units.
Considerations for Acquisition
According to one source, potential acquisitions of other sectors, such as Intel’s server segment, may not align strategically for Qualcomm. At this stage, Qualcomm has yet to approach Intel regarding a potential acquisition, and representatives from both companies have refrained from providing comments on the matter.
Intel’s Commitment to Its PC Business
An Intel spokesperson emphasized the company’s “deep commitment to our PC business,” amid ongoing struggles. The $184 billion Qualcomm is recognized for its smartphone chips and has a noteworthy customer base that includes Apple. Despite exploring the acquisition for months, Qualcomm’s intentions remain unconfirmed and subject to change.
Recent Performance of Intel
Sources indicating knowledge of Qualcomm’s operations have opted to remain anonymous due to the sensitive nature of the discussions. Recently, Intel reported a disappointing second quarter, which included a significant 15% reduction in workforce and a halt on dividend payments. Company executives are under pressure to devise ways to fund manufacturing plans and improve cash flow.
Intel’s revenue from its PC client business saw an 8% decrease, resulting in $29.3 billion last year, reflecting the overall downturn in the PC market. Historically recognized for its successful “Intel Inside” marketing campaign, Intel’s client group is responsible for producing laptop and desktop chips utilized globally. Executives remain optimistic that the rollout of artificial intelligence PCs will incentivize consumers to upgrade their devices, thus stimulating sales.
New Product Launch
In related news, Qualcomm reported total revenue of $35.82 billion for its most recent fiscal year. Earlier this week, Intel introduced a new PC chip named Lunar Lake, which the company’s executives claim delivers enhanced performance tailored for AI applications. Notably, substantial portions of these chips were manufactured by Taiwan Semiconductor Manufacturing Co., a departure from Intel’s traditional in-house production.
Future Developments
Next week, Intel’s board is scheduled to convene to evaluate a proposal from Intel’s CEO Pat Gelsinger and other executives aimed at streamlining operations in a bid to secure cash savings. Among the options under consideration is the potential sale of its programmable chip division, Altera, as reported by Reuters.
