Analysts do not believe in the “deal of the century” – Qualcomm does not need Intel entirely, and regulators will be against it

A potential deal to buy Intel would accelerate Qualcomm’s diversification but would also saddle the chipmaker with a money-losing semiconductor division that would likely be difficult to turn profitable or sell. Reuters writes about this with reference to its own sources among industry analysts.

The deal will also face intense antitrust scrutiny around the world as it will combine two of the world’s most important chipmakers, becoming the largest in the industry’s history and creating a giant with significant market share in smartphone, PC and server chips. During trading on Monday, Intel shares rose almost 3%, helped by media reports about Qualcomm’s plans to buy the struggling chipmaker. Against this background, the price of Qualcomm securities decreased by 1.8%.

«Rumors of a deal between Qualcomm and Intel are intriguing on many levels and, from a pure product perspective, make some sense since they have a number of complementary product lines. However, the likelihood of this happening is extremely low. In addition, it is unlikely that Qualcomm will want to acquire all of Intel, and trying to separate the food business from the chip business is simply impossible now,” said Bob O’Donnell, founder of TECHnalysis Research.

Once dominant in the semiconductor industry, Intel is facing one of the worst periods in its five-decade history, largely due to mounting losses in the contract manufacturing business the chipmaker is developing in hopes of challenging TSMC. Intel’s capitalization fell below $100 billion for the first time in three decades. This happened against the backdrop of the fact that the company failed to take advantage of the boom in generative neural networks by refusing to invest in OpenAI. At the same time, Qualcomm’s capitalization level based on the results of recent exchange trading was about $190 billion.

Qualcomm, which counts Apple among its clients, is looking to expand its business beyond making smartphone chips. The company already makes semiconductor products for other industries such as automobiles and computers. However, the company is still heavily dependent on the smartphone market, which has been in decline in recent years. According to the source, Qualcomm CEO Cristiano Amon is personally involved in negotiations with Intel and is exploring various possibilities for concluding a deal.