In what many consider to be unthinkable, Qualcomm is reportedly pursuing a takeover of Intel in a move that could upend the semiconductor industry.

Rumors started circulating in early September that Qualcomm was interested in purchasing Intel’s semiconductor design business, although company execs were eyeing other parts of Intel as well. According to a report in The Wall Street Journal, Qualcomm is eyeing far more than just Intel’s semiconductor design business and is looking at a complete takeover.

Tune in to our chat about Qualcomm’s bold move to take over Intel!

Intel is worth some $90 billion, making a potential deal one of the largest the tech industry has ever seen. Nonetheless, despite its size, Intel has been struggling on all fronts in recent years. The company has long-since lost its technical lead to TSMC, has struggled to meet consumer demand, and its products have been plagued with security issues and design flaws.

Under CEO Pat Gelsinger, Intel has tried to pivot to the foundry business but has met significant headwinds. Despite some significant wins, the company has failed to secure the level of business it needs, thanks to a combination of technical failings and cultural challenges involved in making chips for other companies.

According to WSJ, a deal is far from a sure thing. It’s unclear how receptive Intel would be, and any potential deal would still need to pass regulatory scrutiny.

Why a Deal Makes Sense

A Qualcomm takeover of Intel makes sense for a number of reasons, not the least of which are Intel’s own failings.

• Intel’s days as a top chipmaker appear to be over. For all it and Gelsinger’s bluster, Intel has not demonstrated that it can regain its crown as a top-tier chipmaker, let alone surpass the likes of TSMC.
• Intel Foundry has largely been a disappointment, costing the company $7 billion in 2023 alone and not bringing in the business it needs to justify the tens of billions the venture has cost. As a result, Intel is currently separating Intel Foundry as an independent subsidiary in the hopes it will be a more attractive investment opportunity for other companies.
• The market is increasingly moving away from traditional x86 semiconductors in favor of the type of Arm-based chips Qualcomm relies on. Acquiring Intel and gaining control of its foundries and manufacturing capabilities would be a major win for Qualcomm, giving it the ability to build its own chips rather than have TSMC or Samsung build them.

The Geopolitical Implications

While regulatory scrutiny is certainly a potential roadblock, as WSJ points out, regulators could see a Qualcomm/Intel deal as a way to save the American semiconductor business. Intel has received significant backing, thanks to the CHIPS Act, but the company seems incapable of delivering.

Qualcomm is another American company with a long and storied history in the industry. Unlike Intel, however, Qualcomm is firing on all cylinders. Giving it the green light to purchase Intel and open the door to it manufacturing its own chips domestically could be a very appealing option for US lawmakers—even if it means losing Intel as an independent company.

In previous coverage, WPN theorized that TSMC, with its Arizona foundries, could ultimately supplant Intel as the premier US-based semiconductor firm. Qualcomm, with Intel as one of its divisions, could well be a far more appealing option for US lawmakers.