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With Wall Street seemingly unimpressed with Intel's latest flourishes to its turnaround strategy, including a jumbo deal with Amazon, the chipmaker might eventually conclude that an outright sale is its only viable exit from the current quagmire. And now, we reportedly have a serious offer that just might tempt Intel.
To wit, the Wall Street Journal is now reporting that Qualcomm has approached Intel with a takeover offer. While the talks remain exploratory for now, any deal would have monumental ramifications for the industry at large.
Intel has 15 fabs; the fabs alone are worth $10bn/each in liquidation value.
The value created by management is negative $50 billion. https://t.co/HkqUQJ4A6J
— zerohedge (@zerohedge) August 2, 2024
Also, given Intel's heft, any takeover deal is quite likely to attract antitrust scrutiny from the authorities. However, in what can prove to be an effective mitigating force, authorities in the US might judge such a takeover critical for national security purposes, thereby adding a potent tailwind to Qualcomm's purported buyout offer for Intel.
Of course, after weeks of speculation, Intel recently revealed its latest game plan to counter a deep-seated malaise that is chipping away at its core competencies.
The plan centers around enhancing momentum within the Foundry division. Specifically, Intel is now planning to spin out its manufacturing arm as a separate subsidiary, which adds some much-needed distance between Intel's chip design and manufacturing competencies and can play an important role in attracting additional customers.
Of course, Amazon has now emerged as the anchor customer for Intel's chip fabrication ambitions. In the first phase of their planned collaboration, the chipmaker will leverage its "Intel 3" process to build a custom Xeon 6 chip for Amazon's data center workloads. In the second phase, Intel will produce an "AI fabric chip" for Amazon's AWS on its 18A manufacturing process, which is compatible with TSMC's 2nm process and is expected to enter the commercial phase in 2025.
In addition to other steps that Intel has already announced to deliver $10 billion in cost savings, the company has paused the construction work in its factories in Poland and Germany for two years and delayed the operationalization of a new advanced packaging factory in Malaysia by aligning its boot up with "market conditions."
Additionally, Intel has already implemented around half of its announced layoff plans, which will see ~15,000 employees exit the firm by the close of 2024. The company also plans to "reduce or exit about two-thirds of our real estate globally by the end of the year."
Critically, Intel continues to move ahead with its projects in Arizona, Oregon, New Mexico, and Ohio. This should ensure continued support from the CHIPS Act funding, including $3.5 billion in federal funding under the so-called "Secure Enclave" initiative of the Department of Defense.
Finally, in opposition to earlier rumors, Intel has reiterated its support for facilitating a public market debut for its FPGA arm, Altera.
It remains to be seen how Intel's latest turnaround strategy affects its purported negotiations with Qualcomm.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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