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Windows Central

Technology

Sean Endicott

One of the biggest tech deals in history is likely to fall through, but would Qualcomm have been able to buy Intel anyway?

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Intel Core Ultra 5 245K and Ultra 9 285K desktop processors in sample packaging for press.

What you need to know

Qualcomm's interest in acquiring Intel appears to be cooling, according to a report by Bloomberg.
Qualcomm purchasing Intel would have been one of the largest acquisitions ever in the technology industry.
Intel has struggled recently, including a $1.6 billion net revenue loss in a recent quarter, a 51% drop in stock value this year, and the company having a $50 billion debt.

When reports emerged claiming Qualcomm wanted to acquire Intel, it sent shockwaves through several industries. The potential deal would have been one of the largest tech purchases in history and would change the entire landscape of chipmaking and computing. Now, it seems that deal may not happen at all. Bloomberg reports that Qualcomm's interest in acquiring Intel has cooled.

The news is not that surprising, though it is still significant. When reports emerged stating Qualcomm was interested in acquiring Intel, it was made clear that a deal was "far from certain."

Bloomberg's sources cited the complexities surrounding the potential purchase as a reason interest from Qualcomm may have weakened. The report also explained that Qualcomm could potentially look to acquire specific parts of Intel rather than the entire company.

To say Intel has struggled recently is an understatement. The company reported a $1.6 billion loss recently and announced that it would lay off over 10,000 employees. Intel CEO Pat Gelsinger said the layoff news was "painful" to share and noted it would be more painful to read. But an empathetic statement likely did little to reduce the sting felt by those affected.

"Our revenues have not grown as expected—and we've yet to fully benefit from powerful trends, like AI," Gelsinger said at the time. Our costs are too high, and our margins are too low. We need bolder actions to address both—particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected."

Intel specified that almost all of its losses stem from its Intel Foundry business. Intel does not foresee that business becoming profitable until 2027.

Intel's current market value is $107 billion but the company's stock has fallen close to 51% this year. The struggles of the company have resulted in $50 billion of debt. That debt is one fact that increases the complexity of a potential purchase of Intel by Qualcomm.

Would Qualcomm be able to acquire Intel?

It's unclear if Qualcomm would be able to acquire Intel due to potential regulatory hurdles, and that's assuming the companies could agree to terms. (Image credit: Getty Images | SOPA)

It's difficult to predict if Qualcomm would be able to purchase Intel, even if the two companies agreed to terms to make a deal happen. The acquisition would be one of the largest tech deals in history and would have had to clear several regulatory hurdles. Like any deal in this category, Qualcomm's hypothetical purchase of Intel would need to be approved by bodies in the United States, China, the European Union, and other areas. Those who followed the Activision Blizzard acquisition by Microsoft will remember how complicated the process can be, though it's worth noting that the deal did go through in the end.

Many believe that the current chair of the Federal Trade Commission (FTC), Linda Khan, would stop Qualcomm from acquiring Intel. But with the recent election of Donald Trump in the United States, there's a good chance Khan is on the way out of her role with the FTC. A new appointee could open a pathway for Qualcomm to purchase Intel, but that still doesn't mean a deal would happen.

Any deal that involved Qualcomm acquiring Intel would also be complicated when it comes to the nuts and bolts of the purchase. Intel has a $50 billion debt that would need to be taken care of.

Perhaps Qualcomm's leadership felt it was not worth the effort to go through a long legal battle that could result in a deal falling through. There's also a chance that Qualcomm's leaders did not see a clear path to a deal that they and Intel's leaders would approve. The mention of complexities by Bloomberg's sources did not shed a ton of light on specifics.

In a Bloomberg Television interview last week, Qualcomm CEO Cristiano Amon said, "right now, at this time, we have not identified any large acquisition that is necessary for us to execute on this $22 billion [goal]." Amon spoke of Qualcomm's aim to generate an additional $22 billion in annual revenue by the 2029 fiscal year.

Assuming Amon was being forthright and not holding cards close to his chest, Qualcomm's leaders may not see Intel as necessary to achieve the goals of Qualcomm.