Domo signs strategic collaboration agreement with AWS for AI solutions
On Monday, industry sources revealed that Qualcomm (NASDAQ:QCOM), with an enterprise value of $193 billion, has approached Intel, valued at $122 billion, about a potential friendly takeover. The Wall Street Journal first reported this development on Friday, shortly after 3 PM. Further stirring the semiconductor sector, Bloomberg disclosed on Sunday that Apollo is considering a $5 billion investment in an unspecified aspect of Intel's business. Apollo has a history of investing in Intel's facilities, particularly in Ireland, which could signal shareholder favorability towards a deal with Qualcomm.
Qualcomm, known for its fabless chip innovation and simple business model, might find the acquisition of Intel a significant challenge due to Intel's complex operations. Intel's diverse portfolio, including its money-losing Foundry and other assets like Mobileye and Altera, presents a complicated picture for potential acquirers. Analysts ponder the value proposition for Intel shareholders, as the company's 2030 plan targets substantial improvements in margins and Foundry revenues, from current levels that are considerably lower.
The prospect of Qualcomm acquiring Intel's chip design segment, which generates $48 billion in sales from PC, server, and networking chips, comes at a time when Qualcomm is expected to lose a significant portion of its modem revenue from Apple (NASDAQ:AAPL). However, the interest in Intel's other operations, given their financial performance and valuation erosion, remains uncertain.
The potential acquisition would require navigating numerous divisions, equity stakes, and government regulations, making it a complex transaction for bankers. Analysts are cautious about valuing Intel based on its individual parts, especially considering the Foundry's losses and the fluctuating core business metrics, including declining gross margins and market share.
As the semiconductor industry watches closely, the discussion of a premium for Intel shareholders is also on the table. With the deal's complexities and Intel's cash burn projections, analysts suggest that any premium might not be substantial, if offered at all. The situation remains dynamic, with no clear indication of an imminent agreement.
In other recent news, Intel Corporation (NASDAQ:INTC) has been approached by Qualcomm and Apollo Global Management (NYSE:APO) regarding potential investment and acquisition. Wolfe Research maintains a Peerperform rating on Intel's stock, pointing to dissatisfaction with Intel's current financial strategy and highlighting significant capital expenditure requirements. Qualcomm's interest in Intel is seen as a move to diversify beyond its core handset business, while Apollo's potential investment aligns with previous funding activities.
Meanwhile, Qualcomm faces a reduced fine of €238.7 million ($265.5 million) for antitrust violations, as ruled by the General Court of the European Union. The fine comes from predatory pricing allegations between 2009 and 2011, aimed at undercutting British phone software maker Icera. Qualcomm has the option to appeal this decision on points of law to the EU Court of Justice.
In other developments, JPMorgan has adjusted its outlook on Qualcomm shares due to potential impacts of Apple's move to in-source modems. Despite this, Qualcomm's diversification strategy is seen as successful, with growth in automotive, IoT, and PCs likely to offset any revenue decline.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.