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Qualcomm's Potential Intel Acquisition May Hinge on The Presidential Election Outcome

AInvestWednesday, Oct 16, 2024 4:29 am ET
1min read

Rumors have been circulating in the market that Qualcomm is planning to acquire Intel, and there has been an update. According to insiders who spoke to the media, Qualcomm will decide whether to acquire Intel after the U.S. elections in November.

It is reported that Qualcomm wants to know the stance of the U.S. leadership on economic issues such as antitrust and China-U.S. trade before making significant decisions. Considering that Qualcomm's acquisition of Intel would be a rare major move in the industry, Qualcomm may further delay the decision and choose to consider the issue of Intel after the U.S. President officially takes office in January next year.

In September, Qualcomm was revealed to have had preliminary contact with Intel regarding the acquisition. At that time, sources also disclosed that in the same month, Qualcomm made a private inquiry to Chinese antitrust regulatory authorities to understand their position on the transaction between Qualcomm and Intel.

In addition, Qualcomm seems to have conveyed its intention to acquire to the U.S. authorities, stating that Intel is one of the cores of the revival of domestic chips in the United States. Therefore, as an American company, Qualcomm's acquisition of Intel can eliminate most of the political concerns of the U.S. government.

Both Qualcomm and Intel are giant companies in the consumer electronics industry, supporting the supply of chips for products ranging from smartphones to electric vehicles. A merger between them would inevitably trigger antitrust reviews by governments around the world.

Intel is also the company that receives the most funding from the White House's CHIPS Act. The Biden administration previously announced that it would provide Intel with $8.5 billion in funding and up to $11 billion in loans for factory construction.

Therefore, the potential acquisition deal between Qualcomm and Intel is highly eye-catching and considered the largest merger and acquisition transaction in the semiconductor industry. However, many analysts believe this deal may do more harm than good.

Analysts point out that antitrust disputes are the first hurdle for the transaction. In addition, Intel's business lines do not complement Qualcomm's strongly, and Qualcomm may exhaust its financial resources but end up with only a beautiful burden. This forces Qualcomm to think twice about this business.

However, there is another advantage to making the formal decision after the U.S. elections. Intel is about to release its third-quarter performance, and the Wall Street consensus is that the company will report a net loss of more than $1 billion in Q3, which may further lower its market price, thus reducing the cost for Qualcomm's acquisition.

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