Mizuho advises caution on Qualcomm stock, cities takeover plans for Intel

On Monday, a Mizuho trade desk analyst expressed skepticism regarding the viability of a takeover of Intel Corporation (NASDAQ:INTC) by Qualcomm (NASDAQ:QCOM) Incorporated (NASDAQ:QCOM), citing significant regulatory hurdles that would likely prevent such a deal from receiving approval. The analyst pointed to past instances where the Chinese government blocked Qualcomm's acquisitions, emphasizing that a potential Qualcomm bid for Intel would face even greater obstacles.

The analyst noted that the Chinese government, which previously hindered Qualcomm's attempt to acquire NXP Semiconductors (NASDAQ:NXPI), is not inclined to support a deal that would strengthen a major U.S. company, especially in the context of increasing U.S. export restrictions on China. The analyst argued that from China's perspective, it would not make sense to approve a deal that would benefit one of its competitors.

Furthermore, the analyst suggested that Intel's CEO, Pat Gelsinger, is not in a position where he would consider a takeover by Qualcomm, especially not one that could be perpetually in limbo due to regulatory issues. Gelsinger is expected to remain focused on Intel's turnaround, with potential strategies including cost reductions and the divestiture of certain business units.

The Mizuho analyst also proposed that if Qualcomm were to pursue large-scale mergers and acquisitions, Marvell (NASDAQ:MRVL) Technology Group (NASDAQ:MRVL) would be a more strategically sensible and feasible target. Marvell's market capitalization and technological assets in AI and data center technology would offer Qualcomm a more attractive and less complex regulatory path compared to an Intel acquisition.

Lastly, the analyst pointed out a smaller but potentially beneficial acquisition target for Qualcomm in Ceragon Networks (NASDAQ:CRNT) Ltd. (NASDAQ:CRDO), which, despite its smaller scale, could offer valuable assets without the complexities associated with larger deals. The analyst concluded that Qualcomm's current CEO Cristiano Amon might favor larger-scale acquisitions, despite the more straightforward alternatives available.

In other recent news, Qualcomm has shown interest in acquiring Intel Corporation, a move that could mark the largest deal in the chip sector's history. The potential acquisition comes as Qualcomm seeks to diversify and reduce its dependence on the mobile market. However, the deal faces potential antitrust scrutiny and concerns about Qualcomm's ability to manage Intel's nascent foundry business.

Simultaneously, Apollo Global Management (NYSE:APO) has proposed investing up to $5 billion in Intel, aligning with its previous funding activities. This recent development indicates an alternative to a full sale for Intel, which is currently dealing with losses in its contract manufacturing division and a decreased market value.

These developments have led Wolfe Research to maintain a Peerperform rating on Intel's stock, reflecting investor dissatisfaction with Intel's current financial strategy. Qualcomm's interest in Intel is seen as a diversification strategy, while Apollo's potential investment aligns with their past funding activities.

In related news, the General Court of the European Union has reduced a fine against Qualcomm to €238.7 million ($265.5 million) for antitrust violations. The company has the option to appeal this decision.

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