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Writer's pictureSarah Ruivivar

Qualcomm Eyes Intel’s Chip Design Units

Image credits: Thufeil M / Unsplash

Intel’s recent financial woes have caught the attention of another industry giant.


Qualcomm is reportedly exploring the acquisition of parts of Intel’s chip design business, particularly its client PC design unit. This potential move comes as Intel grapples with missed revenue expectations and a significant drop in its share price.


According to Reuters, Qualcomm has been eyeing Intel's assets for months, although no formal proposal has been made. Intel remains committed to its PC business, according to a company spokesperson. However, the interest from Qualcomm signals a potential shift in the chip industry landscape.


Intel is also reportedly consulting with Morgan Stanley and Goldman Sachs to explore various options to stabilise its business. These options include splitting its foundry division, cutting factory projects, and considering mergers and acquisitions. The company’s board is expected to review these potential strategies soon.


 

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The urgency for Intel to take bold actions is underscored by its recent financial performance. In the second quarter of 2024, Intel’s revenue fell to $12.8 billion, missing Wall Street’s expectations and resulting in a 27% drop in share value. CEO Pat Gelsinger attributed the shortfall to the rapid ramp-up of Core Ultra AI CPUs and announced plans for significant cost-cutting measures, including layoffs affecting over 15% of the workforce.


Gelsinger emphasised the need for Intel to align its cost structure with its new operating model and adapt to emerging trends like AI. “Our revenues have not grown as expected — and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low. We need bolder actions to address both,” he stated in a memo to employees.


As Intel navigates these turbulent times, the potential involvement of Qualcomm adds an intriguing twist to the unfolding drama in the semiconductor industry. Will this be the shake-up Intel needs, or will it further complicate the company’s path to recovery? Only time will tell.



 

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