Intel share price rises after WSJ reports on Qualcomm takeover attempt

Intel shares rose about 10 percent on Friday afternoon after the WSJ report was published. At the end of the day, the stock closed up 3.3 percent and rose slightly after hours.

Intel was once the world's largest chipmaker and a U.S. technology powerhouse. Around 2018, that leadership position began to crumble as TSMC gradually took over the role of chipmaker of choice for most major technology companies, including Nvidia, Apple and Qualcomm.

Qualcomm makes chips used in smartphones such as the Apple iPhone. Intel has so far missed out on that market. Intel mainly sells chips for PCs and data center servers, although Nvidia's GPUs have gained a serious foothold in that lucrative data center business.

A “strange” fit

Dylan Patel, chief analyst at Semianalysis, said Qualcomm and Intel were a “strange” fit.

“This would result in a lot of duplicate intellectual property, so significant cost savings would be required,” he told Business Insider.

“In addition, Qualcomm is unable to transform its data center business, which is the most important of these,” he continued.

Qualcomm will also struggle to grow Intel's foundry business, Patel added. That foundry business makes chips for other companies and competes (so far ineffectively) with TSMC, which is now the clear global market leader.

An Intel spokesperson declined to comment. Qualcomm did not respond to a request for comment at the time of publication.

Patrick Gelsinger took over as CEO of Intel in 2021 and attempted to reverse the tech giant's downward trend. The company's revenue has been declining in recent years while rivals like Nvidia, TSMC and Broadcom are riding the artificial intelligence wave to new heights. So far, Gelsinger has been seen as unsuccessful and the company announced plans for 15,000 layoffs last month.

On Monday, Intel announced a partnership with Amazon Web Services that will see the chipmaker develop custom designs for the cloud giant, in what the two companies called a “multi-year, multi-billion dollar framework.” Intel's shares jumped following Monday's announcement.

Intel has largely missed the AI ​​boom. Its AI chip Gaudi 3, which is intended to compete with Nvidia and AMD, is expected to generate only $500 million in sales this year. Nvidia will rake in many billions of dollars in the same period.

Qualcomm has taken steps to compete more directly with Nvidia in the age of artificial intelligence. The company last year joined Google and Intel in a coalition called the UXL Foundation, whose goal is to develop hardware-agnostic software that can compete against Nvidia's dominant CUDA platform.