They say it’s always darkest before the dawn — or in beleaguered chipmaker Intel’s case, before the buy-out offer.
What happened: Qualcomm has approached its rival Intel about the possibility of a takeover, per The Wall Street Journal.
- Qualcomm, which specializes in chips and other hardware used in wireless and mobile technology, has reportedly not yet made a formal offer to Intel.
- If it were to happen, a full takeover of Intel — which is worth US$93 billion — would be the largest tech merger in history.
Catch up: Intel once dominated the global chip market but has steadily lost ground to more specialized competitors. Taiwan-based TSMC has eaten their manufacturing business, AMD chips are widely regarded as better designed, and Nvidia has owned the AI space.
- Intel’s share price has dropped by 54% this year and it recently announced plans to lay off thousands of employees as part of a $10 billion cost-cutting effort.
Why it matters: Intel has been core to the U.S. government’s strategy of building up advanced domestic chipmaking capacity, but its multi-year struggles have raised questions about its ability to spearhead that ambitious project.
Bottom line: A friendly takeover of Intel by another American tech giant might raise the eyebrows of anti-trust regulators and will no doubt face political scrutiny, but the deal could also give the U.S. chip industry a much-needed boost in its race with Chinese competitors.—TS