If the acquisition was to go through it would be transformational in the sector but will have to contend with some significant hurdles.
Qualcomm CEO Cristiano Amon is said to be personally involved in the negotiations to acquire Intel and according to sources has been actively examining various options for a deal for the company. However, Qualcomm has yet to make a formal offer and conversations between the two companies remain at an early stage.
Intel has been struggling of late and has lost significant market value. If such a big did go ahead it would be the biggest takeover attempt in this sector since Broadcom looked to acquire Qualcomm in 2018 – then that deal was valued at $142bn.
If negotiations result in a formal offer from Qualcomm, antitrust regulators in the United States, China and Europe will have an important role to play and Qualcomm may be required to divest parts of Intel in order to gain regulatory approvals.
How Qualcomm, which has a market value of $188 billion, would finance a bid for Intel, which is valued at $122 billion, including its debt is another issue.
Other questions that would need to be addressed include how Qualcomm would look to manage Intel's contract manufacturing business. While Intel has years of experience in developing and fabricating chips, Qualcomm has never operated a chip factory.
While Intel has been overtaken by Taiwanese rival TSMC and is struggling to produce a suitable chip for the generative AI boom, the company has been looking to turn around the business. Last week CEO Pat Gelsinger, and other executives, presented a plan to sell businesses and restructure the company, as well as place a pause on the construction of factories in Poland and Germany.
But despite various efforts Intel is still struggling in an increasingly competitive market. Could its acquisition by Qualcomm be the solution?