Is Intel for Sale? Chipmaker Rejects Arm Offer Amid Acquisition Speculation
Could Nvidia acquire Intel? | Credit: Leon Neal / Getty Images.
Key Takeaways
- Intel has rejected an offer from Arm to buy its product division.
- Qualcomm has also approached Intel with an offer.
- With takeover speculation rising, other firms could also enter the bidding.
In recent days, Intel has reportedly fielded an acquisition offer from Qualcomm and rejected a proposal from Arm to buy its product division.
But, with the firm in dire financial straits and vultures already circling, Intel may not remain independent for much longer.
Qualcomm and Arm Eye Intel Acquisition
The news that Qualcomm approached Intel with a takeover offer, first reported by the Wall Street Journal on Sept. 20, has caused quite a stir among observers.
That Qualcomm is potentially in a position to buy out its older rival signals just how far Intel has fallen in the last two years.
Once the most valuable chip company in the world, Intel’s market capitalization was more than twice that of Qualcomm as recently as March 2020.
A similar reversal can be seen with Arm, which first floated on the Nasdaq in 2023 at an initial valuation of a little over $50 billion but is today worth more than three times that.
Intel was once one of Arm’s largest shareholders but recently offloaded its stake to generate cash.
While Intel hasn’t publicly responded to Qualcomm’s approach, it rejected Arm’s offer to buy part of its business, Bloomberg reported on Friday, Sept. 27.
Who Else Could Buy Intel?
With Arm and Qualcomm eying up Intel’s assets, several pundits have speculated that other chipmakers might also enter the fray.
An Nvidia takeover may make the most sense.
For starters, Nvidia has significantly more resources it could use to transform Intel’s struggling operations. Even the heavily loss-making foundry business Arm wanted no part in could be a valuable asset to Nvidia, which currently relies on Samsung and the Taiwan Semiconductor Manufacturing Company for manufacturing.
Aside from semiconductor companies, the investment firm Apollo has also reached out to Intel with an offer.
After Intel proposed plans to spin off its foundry business into an independent subsidy, Apollo indicated it would be willing to invest up to $5 billion in exchange for equity, Bloomberg reported .
One factor that could favor the Apollo deal is an established precedent for the two companies working together to fund Intel’s expensive manufacturing ambitions. In June, Apollo entered a joint venture to provide an $11 billion cash injection to finance Intel’s Irish factory expansion.
Regulatory Hurdles
One factor that could ultimately determine who, if anyone, acquires Intel or part of its business is the view of the Federal Trade Commission. The FTC would need to approve any merger.
Competition concerns would weigh most heavily against Nvidia, which is already subject to a Justice Department antitrust probe.
Buying out Intel would certainly help cement Nvidia’s GPU dominance, adding to existing concerts that it holds a monopoly in the market.
For similar reasons, Intel’s closest CPU rival, AMD, is also an unlikely candidate.
While Arm could significantly boost its revenues by acquiring Intel’s product division, Intel has little to gain from spinning off its most profitable unit.
Qualcomm could probably win over Intel’s major shareholders, which include Vanguard, BlackRock, and State Street, for the right price. However, that deal would also face intense regulatory scrutiny.
Of all the options, an equity deal with Apollo or another investor would likely be the easiest to get past the FTC.
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