Intel’s takeover by Qualcomm is unlikely to be approved by antitrust regulators, especially in China

Those wishing to believe in a successful outcome of Qualcomm’s initiative to acquire Intel assets this weekend were reassured by the phrase that the deal between the two American companies would not cause opposition from regulators in the United States. Meanwhile, it affects the interests of consumers in other markets, and in China, for example, officials will certainly have reasons to block this deal.

Image Source: Intel

At least, this is the opinion of Raymond James analysts cited by Seeking Alpha. Considering the experience of previous attempts by American companies to agree on deals that are important to them, one cannot count on the favor of Chinese regulators in the case of Qualcomm, according to experts. Last August, it was Chinese officials who blocked Intel’s deal to acquire the assets of Israeli contract manufacturer Tower Semiconductor.

From the point of view of European regulators, a possible deal between Qualcomm and Intel also creates conditions for dominance in at least two market segments: central processing units for PCs and smartphones, respectively, since the combined company would control more than 60% of both. According to representatives of Raymond James, it makes sense for Qualcomm to purchase only part of Intel’s assets, but not the entire company, since the latter option creates regulatory risks. The ideal option for Intel would be to sell its subsidiary Altera, but the question is whether Qualcomm needs this programmable matrix developer. Now Altera’s assets are worth between $18 and $22 billion, and in 2015 they went to Intel for $16.7 billion.

In addition, according to Raymond James analysts, Marvell Technology may also be interested in Altera’s assets. True, as in the case of Qualcomm, such a deal still has a chance of falling apart, meeting resistance from Chinese antitrust regulators.